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Supply Chain Management in Pharmaceutical Industry

By: Bushra Sarwar

Introduction:

What is Supply Chain Management?

Supply chain management (SCM) is the successful management of supply chain operations to gain competitive advantages and customer satisfaction. It reflects a concerted attempt by supply chain organisations to build and manage supply chains in the most reliable and possible profitable ways (Kapoor, Vyas & Dadarwal, 2018). Or

SCM is the handling of a good or service’s entire manufacturing flow, starting from the raw components all the way to providing the finished product to the customer.  A business establishes a network of suppliers that transfer the commodity from raw material suppliers to those organizations that directly communicate with customers.

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Core Concept of Supply Chain Management:

  1. Involvement of multiple organizations to transfer the product from origination point to end customer.
  2. Most organizations are restricted to their own activities which are happening inside the organization related to SCM, while few businesses understood the managed activities of supply chain for delivering the product to end user.

Flow in Supply Chain Management:

  • Physical Flow
  • Information flow

Physical flow is the most seeable part of SCM, which involve movement and transfer of goods from one place to another place.

Information flow involves the coordination of daily information about transfer of goods among various members of supply chain.

Working of Supply Chain Management:

Figure 1 Working of Supply Chain Management

Source: IBM

Five C’s of Supply Chain Management:

Figure 2 Five C’s of Supply Chain Management

Modern features of SCM are connectivity with the social media and modern disruptive technologies like IOT (Internet of things), AI (Artificial Intelligence), ML (Machine Learning) etc. collaboration among the supplier by using cloud computing to enable collaboration with many enterprises. Cyber-aware is the most important part to protect the supply chain from cyber attack and malicious malware. Controlling of supply chain through AI enabled platform to make it more automated. Usage of analytics for scale up the information in real time, which is comprehensive and fast. Predictive analytics help to predict future demand based on historical data.

Overview of Pharmaceutical Industry:
India’s presence in worldwide pharmaceuticals is prolific and rapidly expanding. It is the world’s largest supplier of generic drugs, having a 20 percent share of global supply by volume, and also supplies 62 percent of global vaccine demand. India secures 3rd position in production of medicines and14th place in terms of value. India is the only country outside of the USA with the highest number of US-FDA compliant pharmaceutical plants (more than 262, including Active Pharmaceutical Ingredients). More than 2000 WHO-GMP (World Health Organization-Good Manufacturing Practice) sanctioned pharma plant and 300 EDQM (European Directorate of Quality Medicines) plants in India.

60,000 generic brands are produced in India across 60 categories. India is home to more than 3000 companies with a fast and secure network of 10,500 manufacturing facilities (Invest India). Export in Pharmaceutical industry is growing with a growth of 10.72% every year. Cost of production is 33% lower in India in comparison to US market, which attracts most of the companies to open their pharma plants in India.

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Top 10 Pharmaceutical companies in India and worldwide:

Indian Companies Revenue (Billion US $) Global Companies Revenue (Billion US $)
Sun Pharmaceuticals $4.2bn Johnson & Johnson $56.1bn
Dr Reddys $2.4bn Pfizer $51.75bn
Divi’s Laboratories Ltd $2.3bn Roche $49.23bn
Cipla $2.5bn Novartis $47.45bn
Aurobindo Pharma $1.9bn Merck & Co. $46.84bn
Torrent Pharmaceuticals Ltd $1.5bn GlaxoSmithKline $44.27bn
 Lupin $1.2bn Sanofi $40.46bn
Zydus Cadilla $1.0bn AbbVie $33.26bn
Abbott India $1.7bn Takeda $30.52bn
Alkem Laboratories $1.8bn Shanghai Pharmaceuticals Holding $26.69bn

Source: Pharmaceutical-technologies.com

Supply Chain Management in Pharmaceutical Industry:

Pharmaceutical companies do not have flexible, cost-efficient and robust supply chain (Pwc report-Pharma 2020). Figure 1 presents the supply chain of pharmaceutical industry. It covers the innovation and development of new product, manufacturing, packaging, distribution to wholesaler, retailer, and pharmacy and directly to patient. Presently pharmaceutical companies are not working on JIT (Just in time) basis, or producing on demand basis, rather they produce the things, store it in the warehouse and decrease the cost efficiency of companies.

Figure 3 Supply Chain of Pharma Company

Source: Pwc

The pharmaceutical supply chain involves a wide variety of stakeholders; including suppliers, wholesale distributors, and pharmacy benefit managers. The stakes are high for pharmaceutical firms in such a dynamic phase. Drugs that are improperly marketed damage both the credibility and customer loyalty of the organization, as well as future benefit. An inefficient supply chain can disturb the health of patient and create disruptive effect on public health.

Challenges in SCM of pharmaceutical industry:

Major challenges in pharma industry is to maintain the quality of drugs, delivery on time, network of supplier, mode of transportation etc. Few drugs need optimum temperature during transportation from one place to another which became a challenge if temperature is not maintained (Shah, 2004). Recently in news temperature of -80degree Celsius is required during transportation to maintain the quality. So, here emerging technologies like block chain can help to monitor the temperature of vaccine.

Best practices in Pharmaceutical Industry:

In recent years, the pharmaceutical industry has become highly competitive. The rise of counterfeit medications, stringent quality regulations and serialized mandates has been seen. This made it important for the pharmaceutical industry’s supply chain to be strong and traceable. Hill (2019) discussed five best practices to be applied in pharmaceutical supply chains.

Associate and Consort with digital business network

The cornerstone of a multi-enterprise supply chain is a digital business network. This electronically links all of the supply chain partners across the cloud. It makes it possible for them to work together in sync when pharmaceutical supply chain partners are related. This offers end-to-end visibility and an incentive for multiple business interactions to collaborate.

Evaluate manufacturing Practices

Analyze in depth the manufacturing process. Focus on the collection of good quality practices required so that all goods are consistent across all batches. Implement sound measuring practices to guarantee that a drug’s recipe is not contaminated.

Corroborate traceability

In order for pharma companies to have visibility into the development of their partners, end-to-end traceability is important. This will assist them to manage the consistency of the commodity across the multi-enterprise, multi-tier supply chain. Companies can use block chain technology, Internet of things to ensure the traceability in the supply process of medicines.

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Respond to change in Demand

In order to identify and respond to changes in supply and demand, pharmaceutical supply chain management must be robust. You will analyse knowledge in real time through the implementation of state-of-the-art planning applications. Share it with your supply chain partners immediately if you notice an unexpected shift in demand or a supply interruption.

Transparency in Inventory

It is also essential to assign transportation, warehousing and other value-added services to various channels. Get full visibility of inventory downstream and enforce good shipping practices. This will ensure that the destination is reached by your pharmaceutical goods without losing the quality. Transparency will increase the confidence among the partners and stakeholders of supply chain.

Conclusion:

This write-up describes about the supply chain management in pharmaceutical industry. It includes basic concept of supply chain management, flows (information and physical) of supply chain management, working of supply chain management and five C’s of SCM. This study also describes the overview of pharmaceutical industry, top 10 companies worldwide and in India. Role of supply chain management in pharmaceutical industry is also discussed. Effective supply chain management can create the efficient supply of drugs to end users. Major challenges in the SCM are to maintain the quality of drugs, on time delivery etc, which can be resolved by using emerging technologies like block chain, IoT and AI. Finally write-up concludes with the best practices followed in the pharmaceutical industry.

References:

Kapoor, D., Vyas, R. B., & Dadarwal, D. An Overview on Pharmaceutical Supply Chain: A Next Step towards Good Manufacturing Practice. Drug Des Int Prop Int J 1 (2)-2018. DDIPIJ. MS. ID, 107.

Mehralian, G., Zarenezhad, F., & Ghatari, A. R. (2015). Developing a model for an agile supply chain in pharmaceutical industry. International Journal of Pharmaceutical and Healthcare Marketing.

Shah, N. (2004). Pharmaceutical supply chains: key issues and strategies for optimisation. Computers & chemical engineering, 28(6-7), 929-941.

Pwc Report (2020):Pharma 2020-Supplying the future. Retrieved from https://www.pwc.com/gx/en/pharma-life-sciences/pharma-2020/assets/pharma-2020-supplying-the-future.pdf

Hill, K(2019). Five best practices of Pharmaceutical Supply Chain Management. Retrieved from https://www.epmmagazine.com/opinion/5-best-practices-that-pharmaceutical-supply-chain-management/

Wesources:

www.Google.com

www.Ibm.com

www.Pharmaceutical-technologies.com

www.InvestIndia.com

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Social Media Marketing and Consumer Psychology

By: Bushra Sarwar

What is social media?

Usage of internet, social media, smart phone apps and other technology for digital communication has become part of the everyday lives of billions of people. Nowadays, social media is prevalently used by everyone. Social media is a digital platform like Facebook, Instagram, Twitter, Linkedin, etc., which is used by the public to share their ideas, photographs, and information in the virtual world. Other activities like blogging, social gaming, business network, advertisement, platform to promote new talent, movie review etc. even politician used social media to create awareness and reach the voters (Stephen, 2016).  Even in such pandemics, social media helped a lot to spread awareness about the harmful effects of covid. As per the news article of Krishnan (2019), average time spent on social media by Indian is more than 2 hours. An average US adult spent 38 minutes/day on Facebook, while 16-24 years age group youth spent 3hours/day on social media (Metev, 2020). Metev (2020) expected more than 3 billion people are expected to join the social media network.

Social networking began as a way for friends and family to communicate. Still, it was later embraced by companies who wanted to take advantage of a typical new medium of communication to reach consumers. The strength of social media is the opportunity to communicate and exchange data with everyone on this world or several individuals at the same time. Social networking has been primarily adopted as an efficient tool that supports companies’ marketing objectives and strategies, especially in aspects related to customer interaction, management of customer relationships and communications.

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Types of Social Media Network:

Foreman, C. (2017) defined various types of social media network and its usage. Social networking can strategically strengthen two-way contact between businesses and consumers and link more customers to organisations as a result. Figure 1 presents the summary of Foreman defined social media network. Ten types of social media network are explained, and every platform has a different usage for its users. Along with social media, network examples are also given.

Social networks are communication and interaction channels that lead to growing trust among societies. Any website or online forum that allows users to express their views, thoughts, information, and promotes engagement and community building can be categorised as a social network. (Ziyadin et al., 2019).

What is Social Media Marketing (SMM)?

SMM is the use of social media platforms (Facebook, Twitter, Snapchat, Instagram, Youtube, Pinterest etc.) to create your brand, to reach in the audience, to boost traffic on your website, and to reach masses at once. SMM includes sharing great content on your social media pages, listening to your followers and engaging them, reviewing your metrics, and running social media ads.

Do you ever realize, if you visit any add, shopping sites like Amazon, Flipkart, Myntra, AJIO etc., on social media, you start getting recommendations to buy or see on the same kind of advertisement on your social media platform? It is surprising why it happens? It happens due to data analytics tools. Whenever you start visiting a website, company start storing your data and using predictive analytics, start identifying your choices of things and start sending mail related to your wish list.

Fundamentals of Social Media Marketing:

Figure 3 presents the fundamentals and core pillars of social media marketing. Whenever you are in think of to publish something on social media, start looking on the five fundamental principles of SMM. Social media platform generated a lot of content writer jobs to youth. Firstly identify your strategy, define your goals and objectives, identify social media platform and decide the type of content which you want to share with the world.

Start planning and publishing the excellent content on the desired platform, engage your audience by social media tools. By using analytics, identify the preferences of the masses and start catering the same advertisement.

What is consumer psychology?

Consumer psychology is the branch of social psychology to understand the behavior of consumer. Consumer psychology is the process used by consumer to select, decide, and in purchasing of products. Consumer psychology is very important to the business world, once they understand the behavior of consumer, it would be easy for them to serve the products of their choice and desire. As per the Kotler (Marketing Management Book Author), marketing is the pull process, not push process and in this way it differs form selling. When companies start innovating the products, and selling the products as per the consumer’s choice, companies start gaining the market share and stay ahead from their competitors.

Influence of social media on consumer psychology:

As per Fitzgerald (2019), social media has become an essential tool to influence the buying behaviour of consumers. Now a day’s business world is using social media network to reach a large number of population. Studies believed that three kinds of factors affect consumer psychology: social, personal, and psychological. Individual elements are people’s interest and opinion; psychological factors are a person’s beliefs and attitude, whereas social factors are peer’s group, social group, and social media group.

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Fitzgerald presented few facts which show that social media influence consumer psychology:

  • 71% population buy the things based on social media referrals (hubspot report)
  • For purchasing 31% user browse social media. (marketing week.com)]
  • Social media influence purchase of 47% millennial. (Deloitte)
  • To increase brand familiarity 80% population uses social media. (maybe Tech)
  • Shopping brands which have social media presence, their sales are 32% more. (Big Commerce).
  • Mostly brands (90%) use social media for creating brand awareness. (Hootsuite)

The above facts shows that social media has strong presence and influence our decisions. Now this article is discussing the stages of consumer buying process-

Figure 4 Buying Behavior Process

Figure 4 presents the stages of consumer buying behavior process. Social media has strong presence in all the stages, which influence need identification process of customers, during exploring the products, social media sites provides lot of options to explore number of brands products which influence the decision making process of consumers. Social media influence purchase of consumer through various factors. Factors are given below:

  1. Create product awareness
  2. Originate social proof to influence other customers
  3. Discount offer, promotion on social media
  4. Brands endorsed by celebrity and advertise on social media
  5. Celebrity and well known person reviews
  6. Trend set by the influencers

The above factors show the influence of social media in the buying behaviour of consumers because these factors affect consumer psychology. Social media platforms create awareness about the products. Social proofs are significant in an online platform to make a purchase. Whenever we buy any products from social media, we always look for reviews, from the other customers who already purchased the same products and are using it. This creates a picture of satisfaction o sense of belongingness in our mind and forces us to buy the same products which have excellent reviews on social media platforms.

Sometimes, discounts, sales, offers influence or pull the consumer to make a purchase. For example Flipkart, amazon, myntra, big bazaar generate offers on the occasion of Diwali, Dussehra, or any Festivals. Similarly, big bazaar has Wednesday offers. These all offer influence consumer psychology. Similarly, celebrity advertisement and celebrity endorsement also influence our psychology.

Why consumer psychology is important?

Seventy-six per cent of customers expect businesses or brand houses to consider their needs and desires (Salesforce survey). This suggests that if a business brand doesn’t know what a customer wants until they can tell you, they’re likely to take their company elsewhere. Influential companies develop their marketing campaigns based on insights into customer behaviour. Based on their thoughts alone, they do not produce goods and marketing plans; they bring external input into the fold to figure out what consumers want and how they want it then engage with them accordingly. This is the essence of having a meaningful customer experience. For creating a loyal customer base, customer experience is significant.

Conclusion:

This article/write-up throws the light on social media and consumer psychology. The article starts with the introduction of social media, social media networks, and social media marketing. Ten types of social media network discussed in this articles which have a strong presence in the minds of consumers. Strategy, planning and publishing, engaging the customers, analyse and predict consumer behaviour is the fundamental of social media marketing. The article also discussed consumer psychology and how social media platform affects consumer psychology and influence consumer behaviour. Articles also discussed why consumer psychology is essential for the business to increase their outreach and presence in the global world. In all sense, it shows that social media has a strong presence which influences our psychology and buying decision process.

Learn more about Marketing Management and Digital Marketing with Enhelion’s Online course certified by Socio Media and Sahil Malhotra!

Reference:

Foreman, C. (2017). https://blog.hootsuite.com/types-of-social-media/

Fitzgerald, R. (2019).https://connextdigital.com/how-social-media-impact-consumer-buying-behavior/

Krishnan, V. (2019). https://www.thehindu.com/news/national/how-much-time-do-indians-spend-on-social-media/article29201363.ece

Metev, D.(2020). https://review42.com/how-much-time-do-people-spend-on-social-media/

Stephen, A. T. (2016). The role of digital and social media marketing in consumer behavior. Current Opinion in Psychology, 10, 17-21.

Ziyadin, S., Doszhan, R., Borodin, A., Omarova, A., & Ilyas, A. (2019). The role of social media marketing in consumer behaviour. In E3S Web of Conferences (Vol. 135, p. 04022). EDP Sciences.

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Analysis of Corporate Laws in USA, UK and UAE

By: Tanvi Rai

Introduction

“A modern economy is marked by the feasibility of endogenous change: Modernization brings myriad arrangements from expanded property rights to company law and financial institutions.”

– Edmund Phelps

Corporate law, which is also commonly known as enterprise, business, commercial or company law is a sphere of law which deals with managing and governing rights, duties, relationships and conduct of various companies, organisations, businesses and even persons. It is directly related to the life cycle of a company/corporation/business hence it involves the company’s formation, funding, governance, death and many more related aspects.

An additional aspect of Corporate Governance is represented by capital markets, culture of the business, share ownership, and many more aspects, legal rules, characteristics, problems differ from one jurisdiction to another, yet are present in across the world. Corporate law essentially regulates and controls relations amongst companies, its investors, shareholders, board of directors, employees, creditors, other stakeholders like the government, consumers, the society at large and environment along with their interaction with one another. Commercial law is umbrella term which includes company and business laws and all activities related to them. This also includes financial and corporate governance laws.

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Brief Historical Background of Company Law

The modern company law began in the year 1844 in England, United Kingdoms, with passing of the Joint Stock Companies Act. For the very first time a corporation/company could have been incorporated by registration. Before this act, a company could only be incorporated by obtaining either by sanction of a special Act of the Parliament of England or by obtaining a Royal Charter. There was also an important creation made in the process, which was re creation of office of the Registrar of the Joint Stock Companies. In the year 1855, the English Parliament passed another act namely the limited Liability Act which provided for the limited liability to the members of a registered company. Further, in 1856, a new and comprehensive act came into force which superseded the 1854 act and marked the starting of new company law in England creating articles and memorandum of association.

In North America, this charter and new law had two purposes, one was the colonizing rub-off, and another was a trading purpose. The Hudson’s Bay company was almost completely dedicated to only trading activities but most companies like Plymouth, London Company, Massachusetts Bay Company were wholly engaged in settlement of colonists. In other parts, the chartered English Companies continued to be formed for the expansion of new trade.

Analysis of Corporate Laws in USA, UK and UAE

Corporate Law in United States of America

The United States of America is the world’s largest economy having corporate laws at federal, state and local levels and has been flooded with business prospects. This corporate law at the federal level creates minimum requirements for business in company shares and governance rights. Being capitalistic democracy, the country and its corporate laws allow the companies to get incorporated in the state of their choice and convenience, regardless of the place of their headquarters. This and other standards have been enlisted in the Securities Act of 1933 and the Securities and exchange Act of 1934. Over the last century, Delaware General Corporation Law is the most preferred State Law for incorporation of major Corporations and companies. This is specifically for the of lower corporate taxes, lesser shareholder rights against the board of directors of the company and that Delaware has a specialised court and legal profession. Nevada has replication the same. Out of the fifty states, twenty-four of them abide by the Model Business Corporation Act, whereas the states of New York and California are essential due to their massive size.

Incorporation, Charter Competition and Corporate Personality

The articles of incorporation are the foundation of the Company, they not just laid about the basics but also determine the state of incorporation of the company and accordingly levels of corporate taxes, various qualities of shareholder and stakeholder rights, the duties of directors and other things are determined. A business which has been rightly and legally incorporated acquires the status of a separate legal entity which is different from that of its investors. The company can both sue and be sued in its own name.

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Corporate Governance

In principle, a corporation’s constitution can be designed in any way so long as it complies with the compulsory rules set down by the state or federal legislature. Most state laws, and the federal government, give a broad freedom to corporations to design the relative rights of directors, shareholders, employees and other stakeholders in the articles of incorporation and the by-laws.

Duties of the Director

Decisions of a company are majorly entrusted on the directors; these can retrain as well as empower the directors in whose favour they exercise their discretion. The directors should promote shareholder value, which exercising their own business judgement to balance all the claims against various stakeholders, employees, and shareholders. Another duty of the directors are their fiduciary duties which expects them to avoid any conflict of interest between their own pursuit of profit and the interests of the corporation. Another requirement in most of the states is a basic duty of care in performance, this standard is determined from the fact that any prudent man could follow in any contract of services. But the state of Delaware has discarded these duties and allows liability waivers. Duty of care, which is primarily rested upon the shoulders of the board of directors includes standard of diligence and to act with reason and care.

Derivative Suits

The Board of Director owe their duties and responsibilities to the company as whole and not to each and every shareholder and stakeholders individually therefore the right to sue for breach of duty by the Board of directors as a whole or a single director rests by default with the company itself. Hence, this creates a problem where action is brought against a single director when the company has been taken over and the board is non- friendly or has been replaced after the company suffering bankruptcy. There are a few solutions to the aforementioned problem, first being that jurisdictions outside of US allow specific share to shareholders to claim is right. Second is by giving standing to sue to non-shareholder groups and last and the main alternative is with an independent shareholder to derive a claim on company’s behalf to sue for breach of duty. This is decided by the courts on the merits of the case.

Corporate Law in United Kingdom

The Department of Business, Enterprise and Regulatory Reform which is BERR and was formerly the Department of Trade and Industry the DTI is responsible for corporate law and Governance Directorate. UK’s interest in the development of EU company law is represented by this directorate. Matters relating to various aspects of corporate governance are dealt with in codes of best practice.

Formation of the Company

An assortment of organizations might be consolidated under the Companies Act 2006. Individuals keen on beginning the undertaking – the forthcoming chiefs, representatives and investors – may pick, initially, a limitless or a restricted organization. “Limitless” will mean the incorporators will be obligated for all misfortunes and obligations under the overall standards of private law. The choice of a restricted organization prompts a subsequent option.

Rules of Attribution

While a limited organization is considered to be a legitimate individual separate from its investors and representatives, truly, an organization can just act through its workers, from the directorate down. So there should be standards to credit rights and obligations to an organization from its actors. This typically matters in light of the fact that an oppressed outsider will need to sue whoever has cash to pay for penetrate of a commitment, and organizations as opposed to their representatives frequently have more cash.

Directors’ Duties

Directors designated to the board structure the focal expert in UK organizations. In doing their capacities, directors (regardless of whether officially designated, accepted, or “shadow directors”) owe a progression of obligations to the company. There are by and by seven key obligations systematized under the Companies Act 2006 segments 171 to 177, which mirror the precedent-based law and fair standards. These may not be restricted, deferred or contracted out of, however organizations may purchase protection to take care of directors for costs in case of breach. The solutions for penetrates of obligation were not arranged, yet keep precedent-based law and value, and incorporate remuneration for misfortunes, compensation of ill-conceived gains and explicit execution or directives.

Corporate Governance

It communicated that different rules, recommendations and rules structure the rule of corporate organization inside the UK, for instance, exclusively based law rules, for instance, trustee commitments of bosses, secured reports of an association including notice and articles of alliance, form expressly Organizations Act 1985, the presenting rules applying on all associations recorded on the Point Rules or Authority Rundown, the Consolidated Code on

Corporate Administration; be that as it may, the Code’s courses of action are not central, yet it is compulsory for the recorded associations to give their yearly report a declaration showing consistence with the Code and give reasons if not concurring. Keasey, Thompson and Wright (2005) found that the Code is joined by the Smith Direction insinuating audit sheets and evaluators; the Turnbull Direction related to

Code’s internal control need and the Higgs Audit and proposed proposition of good practices. Moreover, non-authentic standards appropriated by bodies addressing institutional monetary trained professionals, for instance, ABI PIRC (the Benefits and Venture Exploration Experts and NAPF are fundamental. All the recorded associations will without a doubt adhere to these standards. Moreover, in case of public associations’ takeovers, Mergers and the rules of the Takeover close by the City Code on Takeovers are important. Additionally, Code of Market Direct of Budgetary Administrations Authority is huge as it relates to the information introduction, which is significantly sensitive and mystery and if it isn’t followed, it might incite make a sham market.

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Corporate Law in United Arab Emirates (UAE)

The corporate law of UAE regulates all the aspects of a company and its management right from governance to finance of the company. Each emirate has its own corporate code.

Types of Business License

There are primarily four types of business licenses provided in UAE, which are professional, commercial, industrial and tourism. Services offered by the various professionals like doctors and others, artisans and craftsmen get a professional license. Trading and commercial activities come under the ambit of commercial licenses, given that these activities are undertaking with the intensions of making profits. Industrial and manufacturing activities are carried out under the industrial license. Lastly, all activities related to tourism like hospitality and travel are covered under tourism license.

Jurisdiction of the company

There are only three jurisdictions that are followed in UAE for formation of a company, there are Mainland, Free Zone and Offshore and all company are divided into these three jurisdictions. These jurisdictions are separate licensing authorities, the mainland is licensed by Department of Economic Development of the respective emirates, which the Free Zone will be licensed by the relevant free zone authority and so will the offshore authority. In the cases of commercial as well as industrial licenses, UAE National holds/owns 51% shares and 49% is held by the expat partner. While in professional license, 100% shares are owned by expat partner but UAE national is appointed as a Local Service Agent.

Limited Liability Company (LLC)

It is the most common form of registered organisation and is recommended where the purpose of the entity is to make sales within the region. An entity with a 100% foreign ownership is not allowed in UAE.  Under the Commercial Companies Law (CCL) of the UAE the foreign investors are allowed to own 49% of equity shares in national companies and 51% at all times by one or more UAE nationals.

LLC under article 218 of CCL can be formed by minimum of 1 and maximum of 50 shareholders who are limited to the liability of their share capital in the company. In the latest amendments to article 217 of CCL minimum share capital requirement is removed allowing founders of a limited liability company the freedom to determine the company’s share capital. MoA or management contract appoints managers and a LLC must appoint one manager and maximum of five managers for business for a fixed or unlimited term. They have fill managerial and administration power, but the LLC is not allowed to practice its activities without Trade License and Commercial Registration Certificate.

Branch/Representative Office

A branch or representative office has the identical legal personality as its parent company as well as operates business under the name of its parent company. The branch or representative office carries out similar activities to that of the parent company. However they are not permitted to carry on business of importing products of the parent company, as this function can only be carried on by local trade agents. In a few instances the representative office of a foreign company are required to obtain an additional license from UAE ministry of Economy. A UAE national must be appointed as a ‘service agent’ for the branch or representative office.

Civil Company

This is a company for the professional like doctors, lawyers, engineers and accountants in UAE. Except the engineering civil company all others are a 100% owned by professional partners. However, a UAE National Local Services Agent is a mandatory. A foreign company can be a partner in a civil company, as long as the foreign company is in the same field as the civil company.

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Comparative Analysis and Conclusion

There is a vast and major difference among laws in US, UK and UAE. The first and the foremost difference is that of Language. While in USA and UK the entire corporate law is in English (which may differ from each other, American English in the states and British English in UK), the law and agreements are primarily in Arabic, and if written in English, have to be deciphered in Arabic. Arabic is preferred over English in UAE.

In the USA, undertakings are at various levels, i.e., government law, state law, and the close by law/local laws. Of course, in the UAE, an individual body picks the rules, and all the organizations require to expect quick to remember. In the USA, cover rules are given to be clung to and further the state applies the relatable standards close by the associations which breaker rules into their by-laws. With the ultimate objective of expense assortment, each level powers its own evaluation which the organization needs to pay. State laws are particular in every one of the 50 states. This grows the multifaceted idea of the pattern of business. The association is restricted by first the public authority rules, by then the state rules, ultimately the local standards. UAE has a uniform system. The organization close by explicit associations picks the rules for all the associations and there is no centre level. Both for the territory associations the ones in smoothed out business zones, there is only one level at which the rules are set down similarly as the obligation procedure is taken.

In UAE, the business and the piece of the business are treated as free substances and the pay made from the branch is considered as the pay of the branch itself, however, in the USA, the branch is treated as a bit of the business and not a unit of the business. Hereafter, the evaluation to be charged on that particular branch is charged on that of the whole business.

The fundamental principles of the UAE give confined commitment to the financial specialists of the association as the business and the speculators are seen as free substances. USA gives a decision to the owners of the association to either get troubled freely on the business and the speculator’s compensation comparably as UAE or the other option is get the business pay in like manner troubled as the owner’s own personal compensation. Regardless, for the resulting decision, certain conditions are to meet.

Definitively, the relationship of corporate organization practices and laws of the UK and the U.S. are similar or there is an indistinguishable standard. Regardless, for associations and their in-house managing, the changing embodiment of the definitive scene of the two countries propels various troubles. Believe it or not, after the deplorable budgetary crisis of 2008 and 2009, the laws demand totally recorded associations to hold quick to code of ethics and related laws and rules. Considering, it has been dependable with the Sarbanes-Oxley Act and 2004 Act; nevertheless, for non-U.S. firms, SEC has been extraordinarily obliging giving them an open entryway through avoidances to develop their associations as they may go up against conflicting challenges considering neighbourhood laws. In the U.S., SOX expect a critical part for effective corporate organization while in the UK, Demonstration 2004, Smith Direction and various laws coordinate to clear money related itemizing.

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Analysis of Trademark Laws in USA, UK, and UAE

Trademarks are, generally, words, names, symbols, devices, designs, or other distinctive signs or stamps which serve to recognize the wellspring of merchandise or benefits and recognize them from those sold by others.[1] Trademarks are usually of names, logos, symbols, devices, etc., representing an individual entity. For instance, the ‘M’ for McDonald’s has a ‘™’ to it specifying the distinction of its source.

Trademarks are essential as they show how viable the product is. They have been used by companies that have a brand value attached to them. It offers quality and ensures the customers’ product safety is received; this also saves the company from fraudulent misuse of their brand name or logo.

Trademarks promote enterprise, both locally and globally, by providing owners of trademarks with recognition and profit. Trademark protection also hinders unfair competitors’ efforts, such as counterfeiters, to use similar distinctive signs to market their products and services. Trademark law allows people with skill and enterprise to produce and market goods and services more profitably, thereby facilitating domestic and international trade. Moreover, trademarks can protect consumers from unwittingly paying a premium for inferior products.[2]

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Brands play a significant role in the socio-economical out a way for the people. The quality of a product is essential in the growth of a brand and the shareholders. To facilitate the whole system of intellectual property, independent trademark laws have been brought out in countries for the ease of business and to protect the companies against fraud.

Rochelle Dreyfuss observes that, in recent years, trademarks have begun to serve an additional purpose, of “becoming products in their own right, valued as indicators of the status, preferences, and aspirations of those who use them.[3] As putting the concept in simple terms by Robert N Klieger, the Trademark makes tomorrow’s business something more than an accident.[4]

US Laws

The US trademark framework accommodates both government and state assurance of brand names. Regardless of whether under government or state law, enlistment is anything but essential for enforceable rights. The principal statute dealing with Trademark and unfair competition law in the United States is the Lanham Act, 15 USC Section 1051 et seq. The Act had been altered on various occasions since its effective date more than 70 years ago. The amendments have, among other things, made dilution of famous trademarks a federal offense; provided statutory damages as a remedy against sellers of goods bearing counterfeit marks; permitted the filing of applications for registration based on an intent to use, and created a private cause of action against cybersquatting.[5]

The Lanham Act governs the enforcement of trademarks, service marks, and unfair competition. It provides authority from the USPTO, which is the US Patent and Trademark Office, to register marks used in interstate or foreign commerce.[6] As a general rule, registration is not expected to get brand name rights or authorize a brand name. Instead, the first body to use a distinctive mark, in the beginning, to utilize a particular mark in business may guarantee rights to that Trademark for the merchandise or organizations with which the imprint is utilized. The proprietor of an unregistered trademark may not use the ‘®’ mark, as it may be used only proceeding or in connection with a registered mark; however, the holder of an unregistered mark might use the ‘™’ symbol to put others on the announcement that it claims rights to a mark.[7]

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As the US Supreme Court has suggested that a trademark is an elaborative form to display the quality of production and to maintain the benefits of a good reputation.[8] Therefore, in the US system, the goodwill is considered over the registration and substantive clauses. The Supreme Court, while quoting the  same stated, “In truth, a trademark confers no monopoly whatever in a correct sense, but is merely a convenient means for facilitating the protection of one’s goodwill in trade by placing a distinguishing mark or symbol-a commercial signature-upon the produce or the package in which it is sold.”[9] Trademark rights can be lost through indecorous licensing, assignment, genericity, or abandonment. If the use of a trademark is licensed without adequate quality control or supervision by the trademark owner, the Trademark will be cancelled. [10]

The language of the statue is somehow or another predictable, with this limited the vision of the extent of Federal protection. Under the Act, a firm initially should select an imprint that is equipped for recognizing its merchandise. Under state law, a trademark need not be famous in order to give rise to a weakening claim. Instead, dilution is available if-

(1) the mark has “selling power” or, in other words, a distinctive quality; and

(2) the two marks are substantially similar. [11]

The steady development in the subject matter and scope of trademark law has not gone disregarded, and legal scholars have long called warnings about the dangers of overly well-developed trademark rights.[12] The laws are based on the gravity of good-faith and the vitality of the owner. If any hindrance is found from the plaintiff, the court decides based on natural justice.

UK Laws

The United Kingdom has a history of trademarks and indictive marks on its products from the 16th Century before the rule of King James I. All these rules were merely in good conscience, and finally, the these were complied with and codified in the Trade Marks Registration Act 1875. These gave the traders a sense of ethics and gave powerful rights to their proprietors and are very important and valuable assets.

Trademark registration is a fairly more organized sector in the United Kingdom as compared to the United States. For the application of a registered trademark, a body has to do the following-

  1. They can register a trademark by applying to the United Kingdom Intellectual Property Office (abbreviated to the UKIPO).[13]
  2. The second option is to file an application with the EU Intellectual Property Office (abbreviated to the EUIPO). The main profit of applying for an EU trademark is it covers all EU member states (including the UK), so you save the money and time of having to make distinct applications in multiple national intellectual property offices.[14]
  3. Lastly, an application can be made using the Madrid Protocol. This allows a home trademark recording or application to form the basis of an application for a so-called international registration. This claim is filed with the International Bureau of the World Intellectual Property Office (or WIPO).[15]

It is to be standard that the trademark laws of the United Kingdom include England, Wales, Scotland, Northern Irelands, and the Isle of Man, and the people of these can only apply for Trademark by the following process. Due to the high level of harmonization in trademark law within the European Union and its member states, Brexit will have a substantial effect on trademark protection in the United Kingdom. First, Brexit would mean that EU trademark protection would no longer extend to the United Kingdom. Not even an often-mooted membership of the EEA as a form of soft Brexit would enable the unitary right to extend to the United Kingdom.[16]

Implementation of trademark rights in the United Kingdom is predominately a civil matter. Both recorded Trademark and passing-off entitlements can be outlooked in the High Court (Chancery Division), as well as in the IP Enterprise Court. Judges in these courts tend to be IP experts. Claims at the Intellectual Property Enterprise Court can be multi-track or small entitlements track; the track chosen has inferences for the remedies available to the proprietors. The ensuing part features an unusually large number of cases this year in relation to “exhaustion of rights” which provide an important role in ensuring free movement of goods within the single market of the claimant.[17]

The administrator of a mark cannot exercise total control over every use of the Trademark; he will, however, be able to an agreement with it like most other property rights by, for example, by assigning, licensing, and mortgaging it. [18]This view surfaced in Arsenal v Reed[19] where it was held that the primary function of a trademark is the origin function.

EU trademark law contains a variety of specific defenses and other limitations on the exclusive rights conferred upon Trademark the EU. Set out under Article 15 of the 2017 EUTM Regulation and Article 7 of the 2008 TM Directive, “exhaustion” acts as a limitation of the exclusive rights provided to EU trademark owners.[20]

UAE Laws

The trademarks in UAE is similar to that seen under the general concept that trademarks are names, words, signatures, letters, figures, illustrations, logos, titles, hallmarks, seals, pictures, patterns, declarations, packets, or any other symbols or group of marks if they were used or proposed to be used either to extricate goods, products or services from whatever sources, or to show that certain services, belongings or products belong to the owner of the Trademark, because of their delivery, manufacturing, selection or trading. The voice accompanying a trademark is considered a part of it. [21]It is governed by the Federal Law No. 37 of 1992 on Trademarks.

The enlisted brand name will be under legitimate assurance in UAE for a long time since the date of authentic TM enrolment. To keep the brand name in power following ten years – the proprietor should pay extra authority fess to the UAE Ministry of Economy for additional augmentation. The amount of expansions for brand name endorsements isn’t restricted.

The UAE Trademark Law contains no direct causes of action for what is frequently referred to as ‘trademark infringement’ in other jurisdictions. Rather, Articles 37 and 38 set out criminal offences focused on fabricating and emulating trademarks. The phrasing of the offenses can make it problematic to bring actions against anything other than the direct counterfeit.[22]

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The lawsuit before the courts includes very little oral advocacy. Instead, written pleadings are exchanged during each hearing. There are usually several rounds of pleadings before the court adjourns to issue its decision. Cases are heard by the bench; there are no jury trials.[23] The work of witnesses to provide oral evidence – particularly in civil cases – is possible but very rare. Authorities may be appointed by the court to provide an opinion on technical or complex matters.[24] The UAE is expected to implement the GCC Trade Mark Law in the coming months. The government has also announced the setting up of specialized IP Courts, which are expected to be in operation soon.[25]

The Trademark Law likewise gives criminal solutions for the encroachment of brand names as fines and additionally detainment. You can likewise make a move against brand name encroachments through Dubai Customs, which has the order to quit encroaching items prior to entering the nation, in this way making your brand name assurance more productive and secure.

Therefore, it is seen that trademarks all over the world are similar and follow the common strategies laid down by the World Trade Organisation. A trademark is the most valuable asset of a business to upkeep its prestige; therefore, it is more important to register the business trademark and to keep an updated. Usually, a trademark is registered for ten years, depending on the laws of each country. It is important to maintain trademarks by brands, especially well-developed brands. Any counterfeit in the following should be brought into action in the courts as many countries have

[1] Brian Farkas, Which Protection Do I Need: Patent, Copyright, or Trademark? NOLO, https://www.nolo.com/legal-encyclopedia/which-protection-do-i-need-patent-copyright-or-trademark.html

[2] Michael Cosgrove et al, Case Study:  Trademark Infringement Issues,7 JOURNAL OF BUSINESS CASE STUDIES,19, 19-26 (2011)

[3]Jeanne C. Fromer, The Role of Creativity in Trademark Law, 86 THE NOTRE DAME LAW REVIEW,1885, 1892-93,(2011)

[4] Ibid.

[5] Roberta Jacobs & Lesley McCall Grossberg,United States, THE LAW REVIEWS,(Oct 2019), https://thelawreviews.co.uk/edition/the-trademarks-law-review-edition-3/1209926/united-states

[6] Jessica Hiney &Lisa M Mottes, Trademark procedures and strategies: United States, WTR, (29 Mar 2017), https://www.worldtrademarkreview.com/portfolio-management/trademark-procedures-and-strategies-united-states

[7] Ibid.

[8] Park ‘N Fly, Inc. v. Dollar Park ‘N Fly, Inc., 469 U.S. 189, 198 (1985)

[9] United Drug Co. v. Theodore Rectanus Co, 248 U.S. 90 (1918).

[10] TradeMark Law, HG.ORG, https://www.hg.org/trademark-law.html

[11] Mead Data Central, Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026 (2d Cir. 1989).

[12] Ralph S. Brown, Jr., Advertising and the Public Interest: Legal Protection of Trade Symbols, 57 Yale L.J. 1165, 1177-80 (1948)

[13] Charlie Bond, UK: The Basics of Trade Mark Law, MONDAQ, (Nov 20,2017), https://www.mondaq.com/uk/trademark/648042/the-basics-of-trade-mark-law

[14] Ibid

[15] Ibid

[16] Marc Mimler, The Effect of Brexit on Trademarks, Designs and Other “Europeanized” Areas of Intellectual Property Law in the United Kingdom, British Institute of Comparative and Operative Law, (Dec 2017), http://eprints.bournemouth.ac.uk/31199/1/Brexit%20Paper%20no.7.pdf

[17] https://www.worldtrademarkreview.com/portfolio-management/trademark-procedures-and-strategies-united-kingdom

[18] All Answers Ltd. November 2018. Trademark Systems in the UK. [online]. Available from: https://www.lawteacher.net/free-law-essays/business-law/trademark-systems-in-the-uk-business-law-essay.php?vref=1

[19][2003] EWCA Civ 696

[20] Trademark Infringement, 109 TRADEMARK REP. 532 (2019).

[21] Intellectual Property, Information & services, https://u.ae/en/information-and-services/business/intellectual-property

[22]  David Harper,UAE – Trademark Litigation 2017 (A global guide), CWB LEGAL, (Oct 21,2016), http://www.cwblegal.com/trademark-litigation-2017-global-guide-uae/

[23] Ibid.

[24] Ibid.

[25] Maria Farrukh Irfan Khan, Trade mark litigation in the United Arab Emirates: overview, UNITED TRADE MARK & PATENT SERVICES,(Sept 01, 2018), https://uk.practicallaw.thomsonreuters.com/w-011-8550?transitionType=Default&contextData=(sc.Default)&firstPage=true#co_anchor_a192792

 

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Role Of Copyright Law in the Media Industry

By: Annie Mampilly

Copyright, as well known is a bundle of rights which are bestowed under law on the creators of literary, dramatic musical and artistic works and the producers of chromatography films and sound recordings. In other words, we can also say that copyright is nothing but the exclusive legal rights which confers protection to an authorship, composition or artistry. Thus, copyright is an umbrella that protects and controls the rights of a person/entity over a literary, dramatic, musical or artistic work or computer program along with the rights pertaining to its publication, sale or production.

In my own words and from my angle of view, copyright is the right of an author over his work. A unique idea, an innovative work, a novel invention are all products of a person’s or an entity’s toil and sweat. Hence, the same should be appreciated and protected. Copyright aims at this. On one hand it confers exclusive right to the author and on the other hand its restricts others from the unauthorized use of the creation without the knowledge and consent of the author. In short, the copyright law indicates a notion of respect towards the creativity of an author.

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Media is often referred to as the ‘fourth pillar’ of democracy in the present scenario. In the current century, Media plays a vital role in the lives of people. Whether it be print media or electronic media, it has become an inevitable part of the lives of the new generation. Through smart phones, computers, laptop, tablets and various other gadgets and applications, media reaches the tip of a person’s finger. The influence of media is in its superlative degree. Irrespective of the veracity of the content, media greatly triggers the societal behaviour in both, good ways and bad ways. Media Industry is an entertainer as well as a destructive weapon.

Movies, songs, serials, programs, shows etc. Occupy prominent positions in the pyramid of media industry when it comes to the creative side. Hence, such creativity needs to be exclusively protected. It is at this juncture, the copyright law steps into the media industry. For example, take the case where a popular song in a particular movie is copied by an individual in his short film. He used the same tune and pitch of the song but wrote an all new lyrics. In such a situation,

  • Is there a copyright violation?
  • Is it legal for him to do so?
  • Is it authorized?
  • Is he punishable?
  • What about the rights of the original author of the music?
  • What are the rights available to the author?
  • Can the author sue the other person?

There are even more questions that can come into the minds of a person during such instances. That’s when a law aspirant needs to know about the role of the copyright laws in the media industry. Let us now have a bird’s eye view on this topic.

Copyright chaos

The number of channels are increasing day by day and TV shows are also multiplying. Hence, this has stirred up a rivalry among channels and leads to a lot of copyright issues as well.

Firstly, take the case of a very popular and highly rated serial. The edifice of a serial is nothing but a strong script. The script is the product of a creative mind i.e. it’s author. The author is very well entitled under law to get his right protected under copyright law. Once copyright is obtained, the author is vested is with absolute and exclusive rights over his creation. None other than he himself is authorized for the use of his work in any manner. Since the entire serial is anchored strongly in its script, it has become a common practise in the media industry to identify means to influence the employees of the rival channel to get to the script and know further. Once the script is known, the rival channels can easily come up with something that could strike out the program.

Secondly, a script alone is not sufficient for a movie or a program or a serial to be born. It mandates various other elements and factors including a production. If a person or an entity should agree to fund the program and become the producer, it is essential and inevitable that the script is shown to them. However, there can be hardly any evidence for sharing of the script with various producers and such situations make the script vulnerable as it is prone to very higher chances of misuse. The idea can be misused if shared with rivals.

It is not the idea per se that is protected under the copyright law. The protection is available only when the idea is as such converted to a tangible instrument. For instance, if a prospective investor misuses the copyrighted instrument, the copyright law can be invoked and legal remedies are available to the author. It also a common practice that both the parties shall enter into a Non Disclosure Agreement for a better understanding and protection of the copyright.

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Section 2(d)(v) and taglines

‘Computer ji lock kiya jaye’

There is not a single Indian who will not be familiar with this tagline by Amitabh Bachan in the popular television program with a world wide fame, ‘Kaun Banega Karodpati’.

Now here is the question. Who owns the right towards this tagline? Is it with Mr.Amitabh Bachan, actor and host of the show who said this line? Is the right lying with the script writer? Should the right go to the Director, who is the real captain of the show ? Or what about the producer who backs the entire program financially?

This is a crucial situation which can bring a very high level of ambiguity as to who owns the rights of a tagline. Section 2(d)(v) of the Copyright Act makes its entry to the scene at this point. This provision elucidates that the author of a Cinematographic work or sound recording is none other than the producer.

Broadcast

Under the copyright law, broadcast rights can also be copyrighted. In simple terms, we all know that broadcast means the transmission of programs either by television or by radio.

On moving from the layman’s idea to a lawman’s idea, the term broadcast embraces a transmission through the medium of a wireless telegraphy of visual images, sounds or other information that is capably of being lawfully received by the members of the general public or that has been lawfully transmitted for presentation to the members of the general public. In covers analogue, terrestrial and satellite broadcasts through television or radio.

The Doctrine of fair use

The most important right of a user of a copyright lies in the doctrine of fair use. It is necessary the rights are used fairly and lawfully. It strikes a notion of balance. It prevents any sort of unlawful, unauthorized and unfair use of the copyright. The fairness it determined by analysing the following factors:

  • The purpose and character of the use.
  • The nature of the copyrighted work.
  • The amount and substantiality of the portion used in relation to the copyrighted work as a whole.
  • The effect of the use upon the potential market for or value of the copyrighted work.

Apart from the above, the doctrine of fairness also gets judged by the impetus of the public interest. Even Courts give high weightage to public interest when it comes to determining the doctrine of fair use.

Offenses and Penalties

Like every other penal law, copyright laws are also no novice to offenses and penalties. The copyright act also classifies certain acts and offenses and the offenses under the copyright laws also comes with penalties as per the gravity and seriousness of the offense committed.

Generally, offenses under the Copyright Act are ‘cognizable offenses.’ Offenders of copyright violations shall be subjected to:

  • Police Search
  • Seizure

Moving to the remedies under the Copyright Act for copyright infringement, there are civil remedies as well as criminal remedies. Let us now have a glimpse at the various provisions and the remedies.

Civil remedies for copyright violations are embedded under Section 55 of the Copyright Act. Criminal remedies for infringement of copyrights are envisaged under Section Section 63 of the Copyright Act. The various criminal remedies explicated under this provision includes the following:

  • Injunction
  • Damages
  • Accounts
  • Other remedies conferred by the law on the owner

Under the Copyright Act, an offender, i.e. a person or an entity that violates the copyright of another person can be punished with imprisonment for a period of 6 months and can extend up to two years along with a penalty of fine of Rupees fifty thousand to Rupees Two Lakhs.

Further, the Police is empowered to seize the infringing copies and all materials utilized to produce the same. Section 64 of the Copyright Act speaks about this.

Tool of Monopolistic Oppression

Even though the main idea behind the introduction of copyright laws lie in the protection of an author’s rights, it has also taken an evil guise too in the present scenario. Exclusivity is an important element in copyright. The author alone gets the right. The sole owner. This shapes a kind of monopoly. And as we all know, mono is one and this kind of a monopoly rules out the chance of a competitor. It restrains others from the use of the copyrighted work and can even bring about criminal liability. In spite of the element of public interest or the larger good, there is higher level of chance that, the copyright given to an author to respect and protect his rights may be used to mould a monopoly outweighing others.

Important judgments

From a legal angle, any study of the role of copyright laws in the media industry is lame and incomplete without a reference to caselaws. There can be landmark cases, precedents, popular cases, etc. Hence, let us now go through a few of the most important copyright cases in the media industry along with a brief description of the verdict or important question of law that was dealt with in the respective copyright caselaw.

No. Copyright-Media Industry Case Law Important points
1 R.G.Anand v. M. S. Delux Films[1] ·      Copyright infringement against the movie ‘New Delhi.’

·      Clarified the concepts of idea-expression dichotomy and copyright infringement.
2 Nichols v. Universal Pictures Corporation[2] ·      Dealt with copyright infringement by non-literal copying of a dramatic work.

·      Held that whether it be a book, play or film, copyright cannot be extended to the characteristics of stock characters in a story.
3 Mandeville-Anthony v. Walt Disney Co.[3] ·      Pertaining to the copyright infringement of copyright in the movies – ‘Cars’ and ‘Cars 2’

·      The Appellate Court affirmed lower court decision that the movies did not infringe the copyrighted works of Jake Mandeville-Anthony as they are not substantially similar as a matter of law.
4 Zee Entertainment Enterprises Limited v. Sony Pictures Networks India Private Limited[4] ·      Copyright issues pertaining to TV shows.

·      It was stated in this case that the surest and safest test to determine whether or not there is a copyright infringement is to see if the spectator, the reader, the viewer or the audience, after having read or seen both the works is of the opinion and is of an unmistakable impression that the subsequent work appears to be a copy or a facsimile of the original.

Conclusion

As stated in the beginning of this work, Copyright, is a bundle of rights which are bestowed under law on the creators of literary, dramatic musical and artistic works and the producers of chromatography films and sound recordings. It is a protective law, it is a law of respect and also a law of appreciation to the author and his creation or his/her innovation. I would also say that copyright law is a necessary law which protects and encourages the creative side of a person.

While the goodness and merits of the copyright law gets piled up on hand, an evil side also peeps out from another side. One should note that, like every other law, the law of copyright is also intended to protect the rights and shield the author against any sort of mala fide and unauthorized use and violation of his or her rights. The doctrine of fair use should be given due weightage. Every case differs from the other and the verdict should be determined after analysing the facts and circumstances of the respective case. Innocent, unintentional, harmless and bona fide infringement should be protected. Public interest should also be given extreme importance in every case. The detrimental factors differs from a case to case basis. Hence, I suggest that, before passing a final verdict in any case, the facts and circumstances should be meticulously analysed, giving due importance to the author’s rights and not outweighing the larger public interest.

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[1] AIR 1978 SC 1613

[2] 45 F.2d 119(2nd Cir. 1930)

[3] 11-56441 (9th Cir. 2012)

[4] Bombay High Court, 5th April 2017

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Role Of Intellectual Property Law In The Sports Industry

By: Pallavi Tiwari

  1. INTRODUCTION

Sports are said to form 1-5 percent of the GDP and thus are very important for economy and various related companies. As far as the recent trend is concerned Indian Premier League (IPL) is going on and this is the most appropriate example to understand the connection between sports, marketing and business. Here, every team has its brand value, their advertisements, their theme songs, logos, brand name, tag-lines, marketing strategy and players’ performance strategy and all of this forms a part of IPR.  All these assets need to be protected as part of IPR from being taken away by third parties.  IP in sports came up first as recommended by Kunstadt but only with respect to copyright and trademark as the players who invest labor to develop a new move should be given economic benefit for the same.[1]

Copyright subsists in the photos clicked in the IPL events and the theme song of the themes or the title track of IPL itself.[2] Design rights can be established in the bats used by players which are specially designed and aim to facilitate their game. Trademark relates to the logo of the teams or their merchandise used in the games. All this helps in the branding of the team and also create some value in the eyes of the viewers. Unless and until something is appealable it holds no value in the market, so for investment it is important that it has created some value in the market. These logos and other IP rights have to be protected so that no one else could copy them or use them in their business and gain advantage of the established image of the players or the team, according to trademark dilution under Section 29(4) of the Trademark Act. [3]

Any third party could come up with these marks or designs and thus cause great loss to the owners and can also tarnish their image by selling bad products in the name of the players or teams by creating confusion in the minds of the consumers, which happened in the famous PayPal or Paytm case. Thus sports and IP laws work in intersection with each other and IP is essential for the commercialization of sports.[4]

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  1. PATENT LAW AND SPORTS INDUSTRY

Patent law can be used in the sports industry with respect to the techniques used in the game or in the making of sports equipment to enhance the efficacy. Some examples of such patents are “D.S. Miller’s Dominant Hand Putting Method” or the “Nolan Ryan’s baseball pitch” and both are either to evade the impediments caused due to some handicap or improve the technique involved in a game. Patent can only be granted if something is novel, non-obvious and has industrial use as per Article 27(1) of the TRIPS[5] and also imbibed into the Indian Patent Law. As far as sports patents are concerned and the first requirement of novelty is to be addressed, it is important to note that even if a player has developed a technique or a move to play or designed an equipment to enhance the game it is important that he gets a patent first on it and then use it in front of other players. If he fails to do so, the patent is said to be already in the public and thus not novel or non-obvious. To determine novelty it is important that the technique or anything to be patented should not be in the mind of the public already expert in the field but the moves or techniques used by the players are just movements of limbs  and thus very commonly discussed and seen amongst the players. Thus generally players fail to get patent due to non-fulfillment of the novelty criteria. Another condition is of industrial application and there is no proof that sport related patent can be used commercially or in an industry. It depends on patent to patent and thus this condition may or may not be fulfilled.[6]

Sports is about learning new moves and mostly players learn from one another but if these moves are patented it would cause an unfair advantage on the other competitors. Sometimes another player in between of a match can use a patented move which would cause the game to come to a halt and thus destroy the basic essence of sports. Thus, this would make the players first think and then make a move or use a technique which would not be spontaneous anymore and going against the principles of sports.[7]

As far as India’s position with respect to patenting moves of a game are concerned section 3(m)[8] of the Indian Patent Act clearly debars “a mere scheme or rule or method of performing mental act or method of playing a game” from being granted a patent. Thus India is still not open to patenting of sports or the moves involved as compared to US which observes as laid down in Diamond v. Chakraborty[9] case that anything can be patented.[10]

Thus, the position of patent grant with respect to sports move is still not clear and uniform across the globe so no decision can be called upon the same.

  1. COPYRIGHT AND SPORTS INDUSTRY

As far as sports are concerned copyright exists in a lot of things like slogans for a team, pictures of players, or any other photography associated with the events. As copyright now involves broadcaster and performers’ rights under the Act, it gives a broadcaster a right to telecast a particular sporting event and to possess that right the companies pay huge amounts. So if any other person uses the broadcast for his own channel then it shall also be an infringement of copyright. These broadcasters make available to the public the sport events as each and every event cannot be attended by the viewers. Thus broadcasting is the major area where copyright subsists in case of sports and due to the revenue generated by licensing the broadcasting rights events can be organized and other related events can take place. Apart from the field events there are computer games also which use software which can be subjected to copyright protection and also patent protection when combined with hardware as computer programs or software are per se not patentable.[11] The characters or graphics used in video games are also subjected to copyright protection as now the craze for online games and events including video games are no less than field sports events.[12]

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As far as copyright in sports is concerned, there are two categories of sports that can be discussed: purposive or non-aesthetic sports or aesthetic sports.[13] Section 13 mentions about works in which copyright subsists and sports is clearly not a part of it. The case of Institute for Inner Studies v.Charlotte Anderson,[14] was one landmark case which discussed why copyright protection is not offered to sports. The High Court observed that yoga asana cannot be granted copyright protection because they are neither included under literary or dramatic work under the Act. The Court also felt that sports lack the main criteria of fixation in tangible medium with respect to copyright. It is also considered anti-competitive in nature as it will thereby reduce the scope for future players to use similar moves.

This is not the case with aesthetic sports (dance, gymnastics, skating) as they involve some creativity and can come under choreographic works protected under copyright. Dancers, gymnasts can also avail the performers’ rights under Section 38 of the Act. They also fulfill the requirements of performance under 2(q) of the Act and performer under Section 2(qq) of the Act and thus are eligible for protection. As far as uncertainty or originality is concerned with respect to copyright protection, aesthetic sports fulfill this criterion. They are also fixated in nature as most of the copyrighted works are as they constitute of certain specific moves.

Further in the case of Star India Pvt. Ltd. v. Piyush Agarwal & Ors.[15] the Single Bench observed that cricket events are subject to performers’ rights protection under the copyright act. But later on, this decision was overruled and the Delhi High Court observed that performers’ rights are not under copyright as they are clearly mentioned to be “special rights” under Section 38 of the Act. But stand in India relating to copyright protection for sports is still unclear.

  1. TRADEMARK AND PROTECTION OF LOGOS AND BRAND NAMES IN SPORTS

Trademarks are used to distinguish goods and services from one another. These days’ sports events also involve a lot of brands and use them in logos and their marks to gain commercially. This is done essentially to create a brand value for products used in these sports or to catch the viewer attention. For example, champions rise is used for FIFA and like in IPL as well every team has their own logo and mark. It helps the viewers to establish a relation with the team or game and to choose their favorite side. There have been cases where players have trademarked their name like David Beckham. In the recent trend of online games it is important to have brand names for teams and events so the viewers can distinguish between them. If some revenue has to be generated through a sports event or by a team it is important that it should have some recognition in the market and this can be established through trademark.[16]

In a famous case STJUE Arsenal v. Reed,[17] the defendant used the branded goods outside the stadium in a commercial manner unofficially thus causing an infringement. Getting trademark on a team or a player’s name which in turn become very popular helps the sports apparel manufacture to establish goodwill on the brand value of the team or the player. According to Forbes ranking it is established that “the portion of [a sports team’s] enterprise value attributable to local revenue streams like television, advertising, merchandise and tickets, that exceeds what a typical team in the same sports generates.”[18]

There are some associated rights to trademarks which are known as personality rights where a player can control how much his personality in the public can be exploited to create a brand value or use it as recognition for a product. When someone uses a player’s name on their goods and does not do well on the goodwill of the player it is a clear case of trademark dilution under Section 29(4) of the Indian Trademark Act. This brand value created by using team names or players’ names can also be used by broadcasters to attract the audience and thus IP law is all mixed up in the sports industry.

  1. TRADE SECRET IN SPORTS AND GAMES

Apart from these above-mentioned IP rights, there is one right which though not yet recognized under IP is important for the sports industry. It is trade secret which forms part of all the secret strategies of teams to win or secret compounds in their gears to make playing easy and winnable or any other dietary ingredient. It is not be disclosed to the public unlike patent rights. Generally other teams might try to steal these assets but they are to be necessarily protected so that no other team or player can gain undue advantage on the same.

Data analysis is another trade secret which needs to be protected from being used by fellow competitors. It may involve screening the way other team plays, their loopholes and the team’s strength and weakness in the past few matches. This then later on helps the team to decide how they will strategize their game and also observe patterns in the player’s physiological and psychological behavior. This data is also known as big-data and though India doesn’t recognize a specific trade secret law it still has been given special importance in US and UK with newly introduced legislations.

  1. DESIGN RIGHTS IN SPORT INDUSTRY

Design rights are generally an extension of trademark law and copyright law where the difference is only that design first of all is only to refer to aesthetic beauty of the product and cannot include anything technical or anything attributing to the functions of the products. Teams or sports events use beautiful designs for products to be used in the game like bats, balls and other goods to attract the viewer attention. It is highly creative in nature and it aims to enhance the appearance of the goods to be used so that if someone buys the product later they can associate it with the design of the team or the player.

One such example is development of clever bicycle by Lucio Tortola, a cyclist to reduce issues in the back and any chance of injury in bicycle rides. This was designed to be a shock absorber and help the cyclists in future. Now this design has become very famous and used by most of the cyclists across the globe. So design is just not for beauty but to also remove some issues involved in the game and help the future players. [19]

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  1. CONCLUSION

The author has discussed various IP rights associated with sports and players and how India stands with respect to these rights. There is also another term called ambush marketing apart from these IP rights infringements which is a problem in the sports industry. Generally it is not within the scope of IP law but needs to be addressed whenever any sports issue is under consideration. It is a very prevalent practice these days when some company tries to commercially get advantage on the basis of already established goodwill of an event. They reap commercial gains in this process by unofficially associating themselves with famous sports events and gaining advantage of being a sponsor when they are not.

Relying on afore-mentioned propositions, it is important to recognize the importance of various IP rights in sports and how they can be protected. IP is always an essential ingredient of any commercial activity and since sports is now more of commercial nature it is important to protect it. In this write-up, the author shall discuss how patent, copyright, trademark, designs, trade secret and other IP rights are closely attached to sports and how can they be infringed so that businesses and companies related to sports can avoid such activities. To save a business it is important to save the IP related to it and similar is the stand for sport industry.

[1] F. F. Scott Kieff, Robert G. Kramer &  Robert M. Kunstad, “It’s Your Turn, But It’s My Move: Intellectual Property Protection for Sports Moves”, 25 Santa Clara High Tech. L.J. 765 (2012).

[2] Anita Roy, “Shield of IPR around IPL”,  http://www.legalserviceindia.com/legal/author-616-anita-roy.html.

[3] Vaishali Singh, “The Untapped Emergence of IP Rights and Sports: Faster, Stronger and Higher” (2019) PL (IPR) July 91.

[4] Zia Akhtar, “Sports development, legal infrastructure and protecting Intellectual Property rights” http://www.africansportslawjournal.com/Sports%20development%20legal%20infrastructure%20and%20protecting%20Intellectual%20Property%20rights_.pdf.

[5] Article 27TRIPS 1994, “Patentable Subject Matter”.

[6] “Leveraging Intellectual Property In The Global Sports Economy: Sports As A Tool For Progress And Development”, Global Innovation Policy Centre, https://www.theglobalipcenter.com/introducing-leveraging-intellectual-property-in-the-global-sports-economy/.

[7] Derek Bambauer, “ Legal Responses To The Challenges Of Sports Patents”, Harvard Journal of Law & Technology Volume 18, Number 2 (2005).

[8] Section 3(m), The Patent Act, 1970 “a mere scheme or rule or method of performing mental act or method of playing game”.

[9] 447 U.S. 303 (1980).

[10] Sharada Kalamadi, “Intellectual property and the business of sports management”, (2012), http://nopr.niscair.res.in/bitstream/123456789/14768/1/JIPR%2017(5)%20437-442.pdf.

[11] S.K. Verma, “IP Protection of Software and Software Contracts In India”, Vol. 17 JIPR (2012).

[12] Molly Torsen, “Intellectual Property and Sporting Events: Effective

Protection of Event Symbols through Law and Practice”, International Intellectual Property Institute,  https://iipi.org/wp-content/uploads/2010/07/Sporting_Events_and_Intellectual_Property.pdf.

[13] Seemantani Sharma, “A Copyright Incentive for Promoting ‘Aesthetic Sports’ in India”, The Entertainment and Sports Law Journal, 17(1), 7, http://doi.org/10.16997/eslj.232.

[14] Case Number: CS(OS)–2252/2011.

[15] MIPR 2013 (1) 201; 2013 (54) PTC 222 (Del).

[16] Paras Sharma, “Intellectual Property Rights In Sports” Volume 8, Issue 3, IJCRT, (2020).

[17] [2003] EWCA Civ 696 (21 May 2003).

[18] M Ozanian “The Forbes Fab 40: The World’s Most Valuable Sports Brands 2017”, Forbes, Forbes Fab 40: Teams (2017).

[19] “Reiventing the Frame, Challenging the Status Quo”    https://www.wipo.int/ipadvantage/en/articles/article_0159.html.

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Analysis of Transportation Laws in India, UAE & USA

By: Subham Agarwal

Humankind has always found ways to transport themselves for business, survival, or food. Transportation has always played a significant role socially, economically, culturally, and commercially. Humankind has also always invented new ways to increase the speed of transportation.

The first-ever steam-powered automobile was built in 1769, and the steam-powered railway was built in 1804. In 1885 the first petrol-powered automobile was developed by Karl Benz, and this year is known as the “Birth year of modern car.” This changed the entire landscape of the transporting system, but change comes at a cost. This started causing various traffic deaths and injuries that resulted in many to express concern. In early 1903, New York City introduced the world’s first traffic law regulating speed limit in the city and countryside. With this, many countries started implementing rules to minimize traffic violations. In later years, the government started imposing stricter rules and regulations to reduce traffic violations, deaths, and injuries.

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United Arab Emirates (UAE)

The United Arab Emirates is a country predominated by Muslims. However, in the last few decades, people worldwide have settled there. UAE is famous for various things, one of them being strict laws. UAE has stringent rules for Motor Vehicle. In UAE, transportation law is of recent origin. The first law was “Federal Law No. (21) of 1995 Concerning Traffic”. The transportation system is also of recent origin. The first Bus service in UAE was introduced in Abu Dhabi by the Emirate in 2008 in only four routes.

In addition to it, the first passenger rail was started in 2009, i.e., Dubai Metro, while the Abu Dhabi metro and Sharjah metro are still under construction. Also, the construction work for the goods carrier train network commenced in 2009. The fact that transportation is of very recent origin in UAE, so the transportation law relating to Railways and others still need to be developed.

However, when it comes to Air Transport, Dubai airport is the world’s busiest airport for the last six years. All the airport in UAE is controlled by the General Civil Aviation Authority (GCAA), and they make all the necessary guidelines for the airport and air carriers.

UAE has one of the most strict laws relating to road transport. As we all know, UAE’s laws are mostly based on the Deterrent theory, but it helps UAE reduce its traffic death and injury. In 2006, 190 people died per million in traffic collisions linked to high speed and low safety culture. In 2010 it reduced to 100 per million, and in 2014-2018 it dropped by 34%.

Road and Transport Authority (RTA) regulates and issues licenses in UAE. It also operates jointly with the traffic department to ensure more efficiency in implementing rules. The road transportation in the UAE comprises driving rules, road rules, road types, land, and marine transportation. In Dubai, penalty points system are followed for each violation, and the authority adds black points for every violation. It leads to the seizure of the driving license if it reaches 24 black points within 24 months, the penalty charges are as follows:

  • On the first violation, the driving license is seized for three months
  • On the second violation, the driving license is seized for six months
  • On the third violation, the driving license is seized for a year and is given when the driver passes the driving course signed by the traffic authorities.

Various rules under Transportation Law of UAE are:

  • The minimum legal age for driving is eighteen, and the person has to renew every year up to the age of 21 and then in every ten years.
  • Wearing of seat belts for all the passengers is compulsory. A child seat is mandatory for up to 4 years of age, and no child below the age of ten can sit in the front seat. Violation of any of it is punishable with a fine of AED 400 and 4 black points.
  • Drinking and driving is considered as one of the most severe crimes, and if caught, imprisonment and/or fine of minimum AED 20,000 (4lakhs INR approx.). An additional charge under Narcotics law is filed.
  • Using a mobile phone while driving is strictly prohibited, and if caught, a fine of minimum AED 800 and 4 black points is charged.
  • Driver must also follow the “3-second rule,” i.e., there must be a 3-second distance between two cars, and tailgating is considered an offense.

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These are some traffic rules of the UAE, and the list goes on. Therefore, after looking at these few rules, we can conclude that UAE traffic rules are stringent but needful to avoid accidents and traffic violations. The deterrent model is beneficial, and various country’s legislators should give thought to it.

United States of America (USA)

In the United States of America, transportation consists of road, rail, air, and waterways transport. Travel through roads consist of 40% share, followed by airways and others. In the USA, the highest contributor to Greenhouse gas emission is transportation. Now, looking at the history of transportation, in the 18th century, most of the travels were done by rail, horses, or horse wagons. In this century, most of the population was situated in coastal areas, so traveling from one city to another was very difficult. Then in the 19th century, the automobile revolution took place. People started using motor vehicles, and due to the invention of better air travel, there was a significant shift from rail transport to air transport. In the 20th century, the national highway system came, and the road became the most preferred mode of transportation. Rail transport declined drastically.

In the present situation, all the states have their own traffic rules and guidelines regulated, supervised, and funded by the U.S. Department of Transportation. Although there are different rules for all the states, they are unified by the Uniform Vehicle Code (UVC). It is a model act by the National Committee on Uniform Traffic Law and Ordinances, a private non-profit group. Most of the members of these groups are state governments.

Compared to the various countries, the USA prefers motorized transit than any other form of transportation. 91% of the population owns 4 wheel vehicle, and 86% of workers have private vehicles for commuting to work.

In addition to it, individuals can also have their own private airport in the USA, and all the airlines are private. The airport safety, pilot training, and investigations are done by the Federal Aviation Administration and Transportation Safety Board. The USA has the world’s most developed air transportation system. There is a minimal passenger train or rail network present in the USA, but rail is heavily used to carry goods.

In many U.S. states, traffic offenses are distinguished into two, i.e., traffic misdemeanors and traffic felonies. Traffic misdemeanors are those minor offenses that do not require any hefty long trial. Punishment for these are fines or going to driving school. Traffic felonies are those offenses that endanger the lives of others while driving. For instance, driving a vehicle to hit and kill someone. Punishment for those offenses, which are a year or more imprisonment, comes under the category of traffic felonies.

In most states, the Points System is followed. This is similar to the UAE Black points system. For each offense, points are added in the U.S., and one can reduce it by paying fines or attending driving school. Too many points lead to temporary seizure of license.

Every state has a Department of Motor Vehicle or Bureau of Motor Vehicles, which keep records of the license holders, including tickets issued against such license holders. After being ticketed, a person can inform the local court about the alleged violation, either plea guilty, not guilty, or nolo contender (not to contest) for a specific time period (usually 10-15 days are given). On pleading guilty, the violator can ask the judge to reduce the fine. On pleasing not guilty, a hearing is done before a magistrate or judge, and if acquitted, then all the ticket will be waived off.

Therefore, we can conclude that every state has different rules and regulations in the USA, making it difficult for people who are traveling to various states. We can also see that ticketing and getting justice for that is a very lengthy process and is a significant burden on people. On the positive side, this clumsy process somewhere creates a deterrent in people’s minds before violating any rule.

India

In India, transportation consists of air, land, water, and rail. Air transport comes under the Ministry of Aviation, and the regulatory authority is the Directorate General of Civil Aviation (DGCA). Land transportation comes under the Ministry of Road Transport and Highway. Waterways come under the Ministry of Shipping, and the regulatory authority is the Inland Waterways Authority of India (IWAI). Lastly, railways come under the Ministry of Railways.

India’s first legislative law on transportation was the “Indian Motor Vehicle Act, 1914” central legislation passed by British India. The act had 18 Sections and gave local government the responsibility of registration and providing licenses to vehicle and drivers, and some regulations.

In India, the maximum number of people are dependent on public transportation. For example, Indian Railways came to India in 1853, running from Bombay to Thane, which is now the world’s 4th largest rail network with the most extensive workforce globally, i.e., 14 lakhs employees.

The potential of air transport in India was first realized in 1911 when an aircraft carried mail from Allahabad to Naini across river Ganga. The first civil aviation company in India was set up by TATA sons in 1932. Then, the Air Corporation Act, 1953, came into force to nationalize the entire industry. Today, the Indian aviation industry is one of the fastest-growing industries, with less nationalize control and more safety regulations work by the government.

In the present day, we are under the provision of the Motor Vehicle (Amendment) Act, 2019. This act amended the 1989 act and imposed more hefty fines on traffic violators. Some of the provisions are:-

  • Driving a vehicle without insurance is punishable with imprisonment up to three months or a fine of Rs 2000 or both for the first offense. Earlier it was Rs 1000.
  • Using a vehicle without registration is punishable with a fine of Rs 2000 to Rs 5000 in case of the first offense and for second and subsequent offense imprisonment up to 1 year or fine of Rs 10,000 or both.
  • In 2016, Good Samaritan Law was passed as Bill on the Supreme Court of India’s judgment. Ministry of Road Transport and Highway later issued guidelines. This law protects citizens who help accident victims from any delay or harassment.

Therefore, we can conclude that the 2019 amendment is going in tune with the UAE deterrent model by imposing hefty fines on violators and also creating awareness among people.

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Impact of Real Estate Laws in India and USA

By: Raj Mehta 

What is Real Estate means?

Real Estate is real property that consists of land and improvements, which include buildings, fixtures, roads, structures, and utility systems. Property rights give a title of ownership to the land, improvements and natural resources such as minerals, plants, animals, water, etc.[1]

Real estate law is the area of law that governs buying, using and selling land. It’s the law that governs how people acquire property and what they can do with the property that they own. Real estate law is also called real property law. Real estate law is called real estate because it’s about real property. Real property is land as opposed to personal property which is objects. Fixtures that are permanently on the land like buildings or other large structures are also a part of real property.

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Types of Real Estate

There are several types of real estate. The main categories are:-

  1. Land

Land is the baseline for all types of real property. Land typically refers to undeveloped property and vacant land. Developers acquire land and combine it with other properties and rezone it so they can increase the density and increase the value of the property.

  1. Residential

Residential real estate consists of housing for individuals, families, or groups of people. This is the most common type of estate and is the asset class that most people are familiar with. Within residential, there are single-family homes, apartments, townhouses & other types of living arrangements.

  1. Commercial

Commercial property refers to land and buildings that are used by businesses to carry out their operations. Examples include shopping malls, individual stores, office buildings.

  1. Industrial

Industrial real estate refers to land and buildings that are used by industrial businesses for activities such as factories, research and development, construction.

 What is Real Estate Contracts?

In the Real Estate sector, the contracts regulating the transfer and use of immovable property are generally in the nature of agreements for sale, sale deeds, development agreements, lease deeds and leave and license agreements. The impact of Force Majeure event is considered on some of the aforesaid contracts as under:

  1. Sale Deed:
    • Acts as a evidence of sale and transfer of ownership of property in favor of the buyer
    • Acts as the main document for further sale by the buyer
    • Things to ensure as a buyer:
      • Title of the seller
      • Check whether there is any charge or encumbrance on the property
      • Ensure that all clearances, approvals, and permissions to transfer or sell the property has been addressed
      • All the pages of the deed to be signed
      • Deed should be witnessed by at least two witnesses
      • Finally, get it registered at the jurisdictional sub-registrar office.
      • Details of the parties
  1. Lease Deed:
    • If the term of lease is exceeding one year or reserving yearly rent has to be registered.
    • This agreement binds both lessor and the lessee for the decided duration
    • Things to ensure:
      • The subject matter of lease must be immovable property
      • Duration of lease should be fixed
      • No interest passes to the lessee before execution
      • Termination clauses can be included based on requirements
      • Details of the parties
  1. Leave and License:
    • There is no transfer of the interest of property as that of Lease
    • Licensee acquires personal right to occupy the property
    • Things to ensure:
      • Duration of the rights
      • Details of the parties involved
      • Details of the property
      • Terms of agreement
  1. Mortgage Deed:
    • The funds lent against which the property is used as security is the mortgage money.
    • The Agreement which instruments the transfer is mortgage Deed
    • Things to ensure:
      • Enforceability and validity depends on the type of mortgage
      • Cross verify the agreed interest rate
      • Tenure of the land should be checked up and mentioned
      • Provision for payment of the amount due in the event of mortgagor failing to pay interest

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INDIA

Real state in India is governed infected by a combination of federal and state specific laws. This is largely because, in accordance with article 246 of the Constitution land is the subject matter of state list or less second of the seventh schedule of the Constitution of India, which covers subjects for which only state can legislate, while transfer of property other than the challan, registration of deeds and documents and contracts other than for agriculture land fall under the concurrent list or list third of the seventh schedule of the Constitution of India, which are subject for which both Centre and states can legislate. Additionally, since India is a country with diverse sects, Laws relating to aspects such as devolution inheritance et cetera draw a large influence from various customs and practices, in addition to codified laws. Over the years various judicial presidents and judgements have also adjudicated upon various aspects relating to real state which are either binding or have a strong relevance value, depending upon the form or court which adjudicated.

 The main laws which regulate real estate in India are:

  • The Transfer of Property Act, 1882
  • RERA (Real Estate Regulatory Authority) Act, 2016
  • The Registration Act, 1908
  • Stamp duty has to be paid as per state requirements
  • For Non-Resident Indians (NRIs) FEMA( Foreign Exchange Management Act, 1999) also apply
  • Investors have to abide by local laws and bylaws
  • Clearance as per environmental laws have to be taken before starting with any project for construction of immovable property
  • The specific relief Act, 1963
  • Other labour laws including for regulating minimum wages and safety insurance provisions
  • Land Acquisition Act, 2013

 Impact of Real Estate Laws &Contracts in India

  1. Timely delivery of flats: Developers often make false promises about the completion date of the project, but hardly ever deliver. As per the bill, strict regulations will be enforced on builders to ensure that construction runs on time and flats are delivered on schedule to the buyer.
  2. Furnishing of accurate project details: In the construction stage, builders promote their projects defining the various amenities and features that will be part of the project. But not everything goes as per plan, with several features missing. As per this bill, there can’t be any changes to a plan. And if a builder is found guilty of this, he/she will be penalized 10% of the project’s costs or face jail time of up to three years.
  3. Specifying carpet area: Generally, builders sell flats on the basis of built-in area, which includes a common passage area, stairs and other spaces which are 20-30% more than the actual flat’s area. But, not all buyers are aware of the concept of carpet area. With this bill it will become mandatory to declare the actual carpet area.
  4. All clearances are mandatory before beginning a project: Builders often attract buyers with huge discounts and pre-launch offers. And, the buyer, enticed by the offers, does not bother about the clearance. But, due to delays in getting clearance, the buyer does not get the flat on time. This bill ensures that developers get all the clearances before selling flats.
  5. Each project should have a separate bank account: Developers raise funds through pre-launch offers and use them to purchase some other land or invest it in other projects. This bill will make it compulsory that a separate bank account be maintained for each project. Each transaction will have to be recorded, and diversion to another project will not be entertained.
  6. 6. After sales service: As per an interesting clause in the bill, if the buyer finds any structural deficiency in the development of the building, the buyer can contact the builder for after sales service. But, the buyer should approach the builder within a year of purchase to rectify such defects without further charges.[2]

USA

Real estate laws & Contracts

Each state within the United States follows a mix of statutory and common-law. There are three levels of law in US:-federal, state and local. Under a common law changes in law come by way of case law and a new legislation, each of which is given equal weight. Rules on parent evidence and requirements that agreement in writing to be in force where is from state to state. Courts will generally rely on the express terms of document unless the intent of the parties is unclear. Courts in the US may consider the conduct of the parties in if the terms of the document are in question is ambiguous. In general, contracts for the sale or transfer of real state should be in writing.

Real estate transactions are governed by a wide body of federal statutes and a combination of state statutes and common law. The requirements established by state law often differ significantly from one state to the next. Real estate brokers are employed as the agent of the seller in order to obtain a buyer for their property. The contract between the broker and seller is called a listing agreement. The agreement may be an open agreement whereby the broker earns a commission only if he or she finds a buyer. It is commonly required in real estate contracts that the title to the property sold be marketable. This requires that the seller have proof of title to all the property he or she is selling and that third parties not have undisclosed interests in the title. A title insurance company or an attorney is often employed by the buyer to investigate whether the title is, indeed, marketable. Title insurance companies also insure the buyer against losses caused by the title being invalid.

In order to pass title, a deed with a proper description of the land must be executed and delivered. Some states require that the deed be officially recorded to establish ownership of the property and/or provide notice of its transfer to subsequent purchasers. The most common method of financing real estate transactions is through a mortgage.

Impact of Real Estate Laws & Contracts in USA:-

  • Clarity in business relationships, agreements, and rights of parties
  • Avoiding potential contract disputes and litigation
  • Preventing misinterpretation of communications and agreements
  • Protecting intellectual property, real property, and asset values
  • Better management of commercial relationships
  • Built-in agreements about resolving disputes through arbitration, mediation, or a court in a particular jurisdiction
  • Documentation to allow comprehensive representation and review by an experienced business law attorney[3]

 

[1] https://corporatefinanceinstitute.com

 

[2] Online ISSN 2395-602X|VOLUME 3 | ISSUE 8| 2017 IJSRST

 

[3] https://www.themyerslg.com/contract-benefits/

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Rise of Financial Institutional Arbitration

By: Yamini Daga

INTRODUCTION

Ever since now litigation has been the most used kind of system for the resolution of the disputes. Though nowadays quite many ways are available through which we can seek the resolution of the disputes like Arbitration, Mediation, Litigation, etc. Then also it is difficult for people to decide that which kind of method they want to opt in. Through time all these methods are emerging in their own fields and ways though litigation are believed to be the oldest form and most opted way. As through litigation people go to the court to seek justice and follow the same age old process.

The Arbitration is also one of a kind of dispute resolution process where the parties privately resolve their dispute as when the party faces a dispute in their agreement they seek the help of the arbitrator. Arbitrator is considered as a third party who listen to both the sides of the party and in return try to resolve their dispute by giving their decision in the form of arbitral award. This is the method where party try to resolve their disputes outside of the courtroom which seems less complex then the proper litigation process as less paperwork is required and experienced person are appointed as an Arbitrator.

Mediation is also a part of the dispute resolution process though in India there are no particular laws related to the mediation at present, but it is still opted by many parties though the decision given by a mediator is not binding in nature unlike the arbitral award which has the same binding authority like the decree passed in the court. In the process of mediation, there is a third party who helps in resolving the dispute by guiding them into the right direction through an informal meeting among the parties to the agreement.

And among all of the above mentioned few methods, arbitration has gained more preference over the age old court systems and the informal meetings with the mediator among the financial sector because of the globalization. As of nowadays people don’t have enough time to go to the court to seek remedy or justice they seek a process which is less complex and which is less time consuming. Thus the emergence of Arbitration is rising in the financial sector too.

ADVANTAGES THAT LED TO WIDENING OF ARBITRATION IN FINANCIAL SECTOR:

Firstly, the procedure of arbitration nowadays require the element of confidentiality. Like whatever is being going on the meetings are not supposed to be seen into the limelight unlike happening in the courtrooms. As there are many mergers & acquisitions cases are coming forward because of the globalization. It is a delicate situation as the sensitive information of the companies can be leaked and be used the competitors to gain an upper hand in the market and use that against the parties of arbitration. Therefore arbitration is a process where the third person who is the decision maker or the arbitrator are bound to maintain the secrecy about the case as they are part of contract to maintain the confidentiality about the parties or about the case.

Secondly, the kind of expertise which is being needed by the arbitrator generally is being lacked by the courts. The Institutional Arbitration have a well-qualified arbitrators with the specific knowledge regarding the subject matter, which in return makes it easier for the parties to seek the justice or solution to their argument.

Additionally, the proceedings of arbitration are generally custom made which provides the level of convenience to the parties by suiting the requirements laid down by the parties and applicability of the arbitral award is easier as compared to the decree or judgment of any court.

 

CUSTOM MADE SOLUTIONS[1]:

As we know, Arbitration is a process which is custom made as in the way it gives option to the parties to decide that how, when, where and in which manner they want to proceed further in the process of arbitration. It provides freedom to parties to decide their method unlike the age old court systems.

  • Parties are free to decide the seat of arbitration, like parties can decide that at which place they would like to hold the meetings and where the whole procedure should take place can be completely decided by the parties. Basically the place of arbitration is decided at the convenience of the parties.
  • Parties are free to determine the way of procedure or procedural rules, the procedural rules are to be decided by the parties in the agreement and if they fails to conclude at a mutual decision than the procedure is being set by the arbitrator themselves.
  • Parties are free to determine the language for arbitration, the language in which they want to hold their proceedings during the process of arbitration.
  • Parties are free to select their arbitrators, parties are free to choose an arbitral institution of their choice like by whom they want their case to be taken care of and the qualifications required by the arbitrator chosen by the parties can also be specified by the party.

 

 GUIDELINES THAT LED TO THE GROWTH OF ARBITRATION IN THE FINANCIAL SECTOR[2]

  1. THE ISDA ARBITRATION GUIDE

The International Swaps & Derivatives Association (ISDA) in the year of 2013 September issued a guide relating to how one can use arbitration in ISDA Master Agreement. Earlier it included sample clause in the agreement, later on an expanded range of model clauses were introduced around the year 2018 for huge number of usage of institutional arbitration all over the world.

  1. P.R.I.M.E. FINANCE RULES

When courts were not able to deal with the nexus disputes arose from the financial sector thus this resulted in the creation of international finance center which is known as P.R.I.M.E. Finance. This deals with the cases related to ADR and in return provides resolution by medium if mediation, arbitration and other disputes resolving services. They have their own rules and clauses which was released with this center on 16th January 2012, situated at Hague. The reason behind opening this center was to fulfill the need of arbitration process required in the financial sectors. All the provisions made under this has only one aim that was to encourage the use of arbitration or law in the financial markets also and to provide justice to people who suffered or went through the wrongdoing or scam of others in this area.

  • THE ICC COMMISSION REPORT

This report was prepared after conversing with at least more than or about 50 financial institutions around the globe and banking counsels or sectors with various policies, awards from minimum about 13 arbitral institutions were also being examined while preparing this particular report.

This report speaks about arbitration that is being performed in the regulatory method, in international finances matters, the disputes between the banking sectors, disputes relating to trade finances, etc. and quite huge growth sectors of arbitration were also recognized in this report.

This report turns out to be were helpful in determining the rise of financial institutional arbitrations among the world by classifying the types of disputes and by recognizing the strength of arbitration process too.

  1. RECENT PROCEDURES

Previously the main purpose behind referring to the national courts over the process of arbitration was to assure speedy resolution of disputes via the judgment given in the format of summary elsewhere, in the process of arbitration the arbitrators are bound by their duty that they have to provide equal, fair and full opportunities to the respective parties of the agreement to set out their cases.

Nonetheless this thought process has been changed now, the institutional arbitration centers around the globe like the Singapore International Arbitration Center (SIAC), the Hong Kong International Arbitration Center (HKIAC), the International Chamber of Commerce (ICC) and many other institutions now provide the summary disposal of the disputes just like old court system which makes the process of arbitration more applicable option.

RECOGNIZED LIMITATIONS OF ARBITRATION

Though the process of arbitration is gaining its pace and being more frequently used method for resolving dispute in the financial market or sector, there are still some justifications that why sometimes this method of arbitration can be avoided. Like in few cases like the criminal cases arbitration is not possible as because these issues are not arbitrable in nature, as the third person can resolve the dispute where the parties to the agreement enter into an argument not where a person committed a crime and being guilty of murder or anything as those cases needed proper justice with the relevant punishments prescribed under the law.

The reason why people opt arbitration may be because of the myth that arbitration process are cost effective process. The Ad-hoc method of arbitration is precisely cheaper and affordable but it lacks experience and some required qualifications too that are being needed by the parties but the institutional arbitration is an expensive method.  As in the financial matters the parties sometimes doesn’t belong to same country which means a matter of cross border agreements are usually being held by the institutional arbitration centers, and it does cost a huge amount of money as the expenditure of procedure and transportation is expensive in nature. The arbitrator might also belong to a different country than any of the party to the agreement which make way for delay in the coordination between the parties to the agreement and the appointed arbitrator which ends up resulting in slow remedies.

CONCLUSION

As the P.R.I.M.E. Finance Rules, the ICC report and other initiatives are being encouraged and set as a means for resolution of disputes by the process of arbitration is being more frequently being recognized by the financial institutions or sectors.

The process of arbitration is most favorable as compared to the other methods of ADR and the age old system of litigation. Though there are many advantages and disadvantages of the process of arbitration but it will still be the most favorable option to be considered for resolving the disputes in the financial sector and the demand for arbitration will grow higher only in the near future too.

 

 

 

[1] Allen & Overy, The rise and rise of Arbitration in Banking and Finance Disputes, (2018, 9th February), http://www.allenovery.com/en-gb/global/news-and-insights/publications/the-rise-and-rise-of-arbitration-in-banking-and-finance-disputes

 

[2] Shreya Shrivastava and Sachin Bhatnagar, The Rise of Arbitration in the Financial Sector, (April 11,2020), https://lawcorner.in/the-rise-of-arbitration-in-the-financial-sector/

 

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Blog

Role of Intellectual Property in Mergers and Acquisition

By: Nidhi Poddar

Introduction 

Intellectual Property has not always horse around Merger and Acquisition deals. Intellectual Property plays a disguised role in 2 major aspects:

  1. By making certain Intellectual Property intensive industries, for example, life sciences, where the value of pharmaceuticals can often be viewed with the scope of patent protection.
  2. By making certain deal structures, for example, spin-outs and joint ventures where the rational allocation of Intellectual Property Rights is an unavoidable necessity.

Whether directly or indirectly, consciously or unconsciously, Intellectual Property plays a significant role in any Merger and Acquisition activity. However, it was not unusual that the acquirer decides and proceeds with the typical Acquisition, without involving Intellectual Property experts. In most Merger and Acquisition deals, the acquirer determines the valuation, negotiates principal deal terms, and even finalized the structure of transactions whether internal or external. In certain aspects, Intellectual Property is a rattler to the Merger and Acquisition train i.e. delighted to affix along but not driving with equal importance. This is evidently accurate for valuation in Merger and Acquisition deals. While valuing a business, the bankers or any other person involved will not endeavor to value Intellectual Property separately. As the valuation of Intellectual Property separately is a burdensome task. If in any case, the acquirer measures the value of Intellectual Property separately from the business, then it would not be in the acquirer’s interest as the acquirer has to pay the higher value of the business.[1]

Merger & Acquisition

Waves of Merger and Acquisition is a key feature of corporate history and has evolved significantly in India in past decades. Merger and Acquisition has become the most important aspect of growth strategy in the corporate industry. Merger and Acquisition has shown an effective result in businesses like information technology, telecommunication, business process outsourcing and pharmaceuticals. The strategy of Merger and Acquisition has proven to be a surest way to acquire competencies and funds, opening new market avenues, expanding customer base, snuffing out competition. The strategy helped the corporate industry in maintaining and improving profitability.[2] Merger and Acquisition is a tool for reconstruction of the company in order to maximize the wealth of the company and create goodwill in the global market. Merger refers to consolidation of two companies into one company. This Merger of two companies will help in maximizing profit and enhance the work and ensure that the company achieves the desired goals. Whereas Acquisition refers to a takeover of one company by another company by purchasing its ownership stake. Generally, such a stake is above 50%, which provides the acquiring company the control of management.[3]

Intellectual Property

Intellectual Property is an incorporeal Property which is invented or created by human intellect. Intellectual Properties are intangible in nature and possess a right i.e. ” Right in Rem” which means that the inventor has the right towards the property wholly. The different forms of Intellectual Property are- Copyright, Trademark, Patent, Design etc. Intellectual Property Rights refers to the legal rights possessed by the inventor or creator in order to protect the invention or the creation for a certain period of time. Intellectual Property Rights is an exclusive right to the inventor or the creator or assignee, to use, sell or dispose the invention. Intellectual Property Rights promote the economic development of the country by creating healthy competition and encouraging industrial development and economic growth within the country.[4]

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Intellectual Property is referred to as a corporation’s biggest asset. In the New Economy- Brand names i.e. (Trademarks, Service marks and Trade names), Product value, Brand value, Innovation portfolio of the company plays a pivotal role in the management of assets of the company and are equally important as the goods and services. Sounds, smells, colour and product shape comes under the trademark protection. There should be no surprise that Intellectual Property plays a crucial role in the sale or purchase of a business.[5] Intellectual Property plays a vital role in the strategic development of the corporation. Intellectual Property is one of the various reasons for which different corporations merge or acquire any company, because such Merger and Acquisition strengthens their market share and improves and makes their management system efficient.[6] With the technology advancement, the importance and the value of intellectual property of a company has enhanced. The intellectual property possessed by a company is a cornerstone, thus has increased focus on intellectual property while any commercial transaction. In the present era, it has become the most task to identify and adequately analyze the value of intellectual property of the company as it will directly impact the value of the transaction.[7]

IP due diligence

This article intends to highlight and provide a quick overview on how Intellectual Property due diligence is important in Merger and Acquisition transactions. There is great  significance of Intellectual Property due diligence in Merger and Acquisition transactions in relation to the acquisition or investment in technology and biotech companies because the main purpose of acquiring such company is to target the Intellectual Property Assets (IPA) of the company. Intellectual Property Assets mainly refers to Patents, Trademarks, Copyright. Intellectual Property due diligence refers to a deep investigation which is conducted to understand the value of the Intellectual Property of the target company before any Merger or Acquisition.[8]

Role of Intellectual Property in Merger and Acquisition:-

  1. Value addition to the company portfolio:–

Merger and Acquisition of a company helps in adding value to the portfolio of a company. It is very necessary that companies evaluate the portfolio of the company and check whether the current portfolio meets the requirement of the company objective. In the present dynamic and inconstant market environment, it is not possible to invent something new, thus the companies must search for new opportunities and the ways of acquiring existing innovations of the other companies.

  1. Acquiring unique capabilities:-

Every company wishes to have a stronghold and be in a dominating position against their competitors. One of the major tools to achieve this is Merger and Acquisition. By Merger and Acquisition, a company may acquire the unique innovation or capabilities of their competitors. This will help the companies to have an edge over others. This result in changing the whole outlook of the company and creating a unique and efficient business model. 

  1. Transfer of Technology: –

A fruitful benefit of acquiring an Intellectual Property is that it allows the transfer of technology from one company to another. This helps in proper exploitation and utilization of the Intellectual Property to its full extent.

  1. Diversification: –

The Acquisition or Merger of a company helps in exploring and enhancing different sectors of a business. Merger and Acquisition open new doors of deals and growth within the market. It is very convenient to start a business through pre-existing or pre-established resources, and even this reduces the cost of operation and helps in creating a diversified asset portfolio for the company.

  1. Growth: –

The main objective to implement the corporate strategy is to promote growth and development and to maximize the profit, resulting in achieving the desired goals. The company must ensure that the product portfolio of the company is updated and is efficient to meet the current demand in the market.[9]

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Some classic example of Merger and Acquisition

  1. In 1988, Nestle acquired Rowntree business. It was the largest foreign takeover of a United Kingdom Company. In this deal, Nestle agreed to pay around US $ 4.5 Billion for Rowntree PLC. The main objective of this deal was to acquire famous brands i.e. Kit Kat, Yorkie, and Rolo.
  2. Another Classic example is Acquisition of Luxury Italian fashion house Versace by Michael Kors. The main objective of this deal is to access new product lines and markets through an established brand and IP portfolio.[10]
  3. Motorola Mobility was acquired by Google Inc. which gave the acquirer complete control of Motorola’s patents. Later Google Inc. sold Motorola Mobility to Lenovo, but retained ownership of Motorola Mobility’s Patent Portfolio. The main objective of Google Inc. was to purchase the patents of Motorola mobility.[11]
  4. Another interesting case study is the Acquisition of Rolls Royce by Volkswagen. Volkswagen has acquired all the assets required for the production of cars but was restricted to use the Logo of Rolls Royce. Volkswagen overlooked the fact that prior to the Acquisition, BMW has already acquired the access to use Rolls Royce Logo for its car.[12] BMW was a direct competitor to Volkswagen. Volkswagen purchased all rights to manufacture Rolls Royce cars but did not have engines for their car as BMW was producing engines for Rolls Royce. Rolls Royce factory was manufacturing both Rolls Royce and Bentley cars. After a lot of twists and turns, in 2003 BMW became the owner of Rolls Royce and Volkswagen is sole manufacturer of Bentley cars. This case study reiterates the importance of intellectual property due diligence before any Merger and Acquisition.

By the above stated classic examples what we get to learn from it.

In any Merger and Acquisition proper due diligence of Intellectual Property asset is a must. The nature of Merger and Acquisition is stated as risky and with the technology advancement in the present era has become riskier. Due diligence of Intellectual Property Assets must be the pertinent question before initiating a formal contact with the target company. Before contacting, the company must do some homework and must collect certain information regarding patents, trademark, copyright, goodwill etc. Needless the same amount of importance must be given to the tangible and intangible assets to get a fair valuation.[13]

Conclusion

Intellectual Property are the intangible assets of the company and plays a vital role in the expansion of the company and even add a great value to the portfolio of the company. Merger and Acquisition help in creating asset portfolio, acquire new capabilities, enhance the growth rate which ultimately help the company achieve their goals. To avoid any uncertainties or defects, a company should ensure a proper due diligence and valuation of Intellectual Property asset before acquisition of the Intellectual Property asset.

A company survival, goodwill and the profit depend on the possession of IP assets. It must be ensured that the deal benefits both the parties. Government is bringing out various policies to encourage Merger & Acquisition in India. The Land Acquisition bill, Labor Law and Good & Sale Tax (GST) will have a great impact on the corporate field.

Any company at any level or a startup company must emphasize on the importance of protecting their Intellectual Property rights. The acquiring company must conduct due diligence to improve their marketability and be able to identify weaknesses.

Due diligence is an integral part of any Merger and Acquisition transaction. Any act of negligence while performing due diligence can lead to over valuation of the company and even lead to an exposure to a unknown risk and liabilities.

[1] https://www.sullcrom.com/siteFiles/Publications/Mousavi-IAM-July-Aug-2011.pdf

 

[2] https://pdfslide.net/documents/Intellectual-Property-the-dominant-force.html

 

[3] http://www.legalserviceindia.com/legal/article-2693-role-of-Intellectual-Property-in-an-acquisition-or-Merger.html#:~:text=Intellectual%20Property%20assets%20are%20the,such%20as%20Merger%20and%20acquisition.

 

[4]  https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3217699/

 

[5] https://norrismclaughlin.com/articles/Intellectual-Property-aspects-of-Mergers-a-Acquisitions-part-i-of-ii-conducting-due-diligence/

 

[6]  https://www.udl.co.uk/insights/the-importance-of-ip-in-Mergers-and-Acquisitions

 

[7] http://www.buildingipvalue.com/05_NA/124_127.htm

 

[8] https://www.corporatelivewire.com/top-story.html?id=ip-due-diligence-in-ma-transactions

 

[9] Supra note (3)

[10]  https://www.udl.co.uk/insights/the-importance-of-ip-in-mergers-and-acquisitions

[11] https://www.businesswire.com/news/home/20150407005604/en/Research-Markets-Strategic-Importance-Intellectual-Property-IP

[12] https://medium.com/@ramkumar1984.rajachidambaram/how-ip-acquisition-unlocks-huge-value-in-technology-m-a-23e2739cf091

 

[13] https://www.origiin.com/2019/01/10/mergers-and-acquisitions-intellectual-property-due-diligence/

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