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The Conundrum of Priority Disputes: Isaac Newton versus Gottfried Wilhelm Leibniz

By: Rushika M 

“It is most useful that the true origins of memorable inventions be known, especially of those that were conceived not by accident but by an effort of meditation. The use of this is not merely that history may give everyone his due and others be spurred by the expectation of similar praise, but also that the art of discovery may be promoted and its method become known through brilliant examples.”[1]

-Gottfried Wilhelm Leibniz

One of the oldest and most controversial intellectual property disputes in the world is the peculiar case of Sir Isaac Newton and Gottfried Wilhelm Leibniz. As rightly described by Jason Socrates Bardi in the title of his book ‘Calculus Wars’, the dispute between Newton and Leibniz is the ‘greatest mathematical clash of all time’.[2]

The dispute between Newton and Leibniz was not an uncommon one, especially in the 17th century which has been described by the American science historian D. Meli as the “golden age of the mud-slinging priority disputes.”[3] Both men being great mathematical minds and accomplished intellectuals, claimed priority over the invention of Calculus. For those unaware, Calculus is the branch of mathematics that deals with the finding and properties of derivatives and integrals of functions, by methods originally based on the summation of infinitesimal differences.[4] In short, it is the study of continuous change.[5] Presently, the use of calculus is indispensable in many fields of science and mathematics such as physics, computer science, engineering, statistics, economics, medicine, and demography to name a few. Both, Newton and Leibniz sought to establish the same as their own invention. However, the distinguishing quality of their case is not only the nature and subject-matter of dispute but also the manner in which each sought to establish their priority.

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A brief description of the dispute is as follows. Infinitesimal calculus may be expressed in one of the two forms: (i) as a notation of fluxions or (ii) as a notation of differentials. Newton employed fluxions in his research which can be dated back to as early as 1666. However, he did not publish his work until the year 1693. On the other hand, Leibniz employed the method of using differentials and formulated his own notation which can be dated back to as early as 1675.[6] He also referenced the same in his letter addressed to Newton in the year 1677 and included it in his memoir of 1684.[7] The dispute between the two men arose when Newton claimed that Leibniz was made aware of Newton’s research long before he arrived at his own notation and hence, Newton was the first inventor of calculus, while Leibniz had only formulated another notation based on the principles and work of Newton.[8] Since the prevalent method of establishing priority in the 17th century was not in the form of first publication or registration as it is in the present era and the usual mechanisms were in the form of anagrams, sealed envelopes, correspondences or a private message exchanged between peers, etc., the dispute between Newton and Leibniz could not be effectively resolved on the basis of first publication.

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Primarily, evidence lies in favour of Leibniz’s claim of a notation independent of Newton’s for three reasons: (i) Leibniz, who is presumed to have acted in good faith, always alluded to his discovery being his original work and this claim was undisputed for a few years; (ii) his work was published long before Newton published his method of fluxions; and (iii) in his private papers, Leibniz demonstrated the originality of his derivations and their independence from Newton’s work. However, those contesting Leibniz’s claims questioned his good faith and believed that he had been acquainted with Newton’s work in or before 1675, the reason being that Leibniz frequently corresponded with a Mr. John Collins, who was not only well-acquainted with Newton’s work, but had also received copies of the same from Newtons mentor Isaac Barrow.[9] When, in 1849, C. I. Gerhardt found copies of Newton’s work in Leibniz’s manuscripts, the claims were further substantiated. However, since it is inconclusive as to when Leibniz obtained the copies, the same cannot be considered conclusive evidence in the matter. Doubts were also cast on Leibniz’s testimony when he anonymously published a slanderous review of Newton’s tract on quadrature implying that Newton had borrowed the idea of the fluxional calculus from Leibniz and when he deliberately altered or added to important documents before publishing them, and falsified a date on a manuscript.[10] In any event, the entire dispute was also tainted by a bias favouring Newton who, while serving as the President of the Royal Society, found favour in the committee report of the Society that presided over the dispute. Although the matter came to a temporary end with the death of Leibniz and the modern consensus is that both Newton and Leibniz developed their ideas independently, debates between the supporters of the two persist to this day.

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Upon a brief analysis of the above dispute, two things are evident: (i) that much of the dispute between Newton and Leibniz was caused by assumptions which were often unsubstantiated; and (ii) the evidence presented by the gentlemen was mostly testimonial or by way of hearsay. It was perhaps due to this reason that the dispute remains unresolved to this day. Or perhaps it was the nature of the dispute resolution mechanism at the time that is to blame. Irrespective of the same, what remains consistent to this day is the topical nature of priority disputes, may it be in the field of science and mathematics, or literature, or any other domain, thus resulting in the substantial growth and relevance of intellectual property laws and jurisprudence.

At present, in India, the Indian Patents Act, 1970 is the one comprehensive law that safeguards the interests of inventors or patent holders in India. The Patents Act, 1977 would be the legal authority in the European Union, including the United Kingdom of Great Britain and Northern Ireland. A priority dispute today would be resolved under the dispute resolution mechanisms of these laws and such being the case, the standard of evidence required to prove the claims of either party would be far greater than those evidenced by Newton and Leibniz during the 17th century. It is likely that the dispute would not even have persisted for as long as it did at the time. Regardless, the case of Sir Isaac Newton and Gottfried Wilhelm Leibniz is a memorable one and one of immense significance not only to academicians and scientists, but also to legal practitioners in the field of intellectual property law.

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[1] G. W. Leibniz, The Early Mathematical Manuscripts of Leibniz; Translated and with an Introduction by J. M. Child, The Open Court Publishing Company, 1920. (Reprinted by Dover Publications, 2005.)

[2] BARDI, J. S. (2006). The calculus wars: Newton, Leibniz, and the greatest mathematical clash of all time. New York, Thunder’s Mouth Press.

[3] Hans Gaab and Pierre Leich Simon Marius and His Research, Springer, 2019.

[4] Oxford Languages, Calculus.

https://www.google.com/search?q=calculus+meaning&rlz=1C1CHBF_enIN859IN859&oq=calculus+&aqs=chrome.3.69i59l2j69i57j0i433j46j69i60j69i61j69i60.4602j0j7&sourceid=chrome&ie=UTF-8

[5] Cambridge English Dictionary, Calculus. https://dictionary.cambridge.org/dictionary/english/calculus

[6] Norma B. Goethe, Philip Beeley and David Rabouin, The Interrelations Between Mathematics and Philosophy in Leibniz’s Thought,  http://ndl.ethernet.edu.et/bitstream/123456789/57413/1/19.pdf.pdf#page=119

[7] Blank, B. E. 2009 Review of J. S. Bardi: The Calculus wars. Notices of the AMS 56:602–610.

[8] Sir Isaac Newton, The Correspondence of Isaac Newton, 7 v., edited by H. W. Turnbull, J. F. Scott, A. Rupert Hall, and Laura Tilling, Cambridge University Press, 1959–1977.

[9] Supra, 6.

[10] Ibid.

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Blog Cyber Laws

Landmark Cyber Law cases in India

By:-Muskan Sharma

Introduction

Cyber Law, as the name suggests, deals with statutory provisions that regulate Cyberspace. With the advent of digitalization and AI (Artificial Intelligence), there is a significant rise in Cyber Crimes being registered. Around 44, 546 cases were registered under the Cyber Crime head in 2019 as compared to 27, 248 cases in 2018. Therefore, a spike of 63.5% was observed in Cyber Crimes[1].

The legislative framework concerning Cyber Law in India comprises the Information Technology Act, 2000 (hereinafter referred to as the “IT Act”) and the Rules made thereunder. The IT Act is the parent legislation that provides for various forms of Cyber Crimes, punishments to be inflicted thereby, compliances for intermediaries, and so on.

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However, the IT Act is not exhaustive of the Cyber Law regime that exists in India. There are some judgments that have evolved the Cyber Law regime in India to a great extent. To fully understand the scope of the Cyber Law regime, it is pertinent to refer to the following landmark Cyber Law cases in India:

  1. Shreya Singhal v. UOI[2]

In the instant case, the validity of Section 66A of the IT Act was challenged before the Supreme Court.

Facts: Two women were arrested under Section 66A of the IT Act after they posted allegedly offensive and objectionable comments on Facebook concerning the complete shutdown of Mumbai after the demise of a political leader. Section 66A of the IT Act provides punishment if any person using a computer resource or communication, such information which is offensive, false, or causes annoyance, inconvenience, danger, insult, hatred, injury, or ill will.

The women, in response to the arrest, filed a petition challenging the constitutionality of Section 66A of the IT Act on the ground that it is violative of the freedom of speech and expression.

Decision: The Supreme Court based its decision on three concepts namely: discussion, advocacy, and incitement. It observed that mere discussion or even advocacy of a cause, no matter how unpopular, is at the heart of the freedom of speech and expression. It was found that Section 66A was capable of restricting all forms of communication and it contained no distinction between mere advocacy or discussion on a particular cause which is offensive to some and incitement by such words leading to a causal connection to public disorder, security, health, and so on.

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In response to the question of whether Section 66A attempts to protect individuals from defamation, the Court said that Section 66A condemns offensive statements that may be annoying to an individual but not affecting his reputation.

However, the Court also noted that Section 66A of the IT Act is not violative of Article 14 of the Indian Constitution because there existed an intelligible difference between information communicated through the internet and through other forms of speech. Also, the Apex Court did not even address the challenge of procedural unreasonableness because it is unconstitutional on substantive grounds.

  1. Shamsher Singh Verma v. State of Haryana[3]

In this case, the accused preferred an appeal before the Supreme Court after the High Court rejected the application of the accused to exhibit the Compact Disc filed in defence and to get it proved from the Forensic Science Laboratory.

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The Supreme Court held that a Compact Disc is also a document. It further observed that it is not necessary to obtain admission or denial concerning a document under Section 294 (1) of CrPC personally from the accused, the complainant, or the witness.

  1. Syed Asifuddin and Ors. v. State of Andhra Pradesh and Anr.[4]

Facts: The subscriber purchased a Reliance handset and Reliance mobile services together under the Dhirubhai Ambani Pioneer Scheme. The subscriber was attracted by better tariff plans of other service providers and hence, wanted to shift to other service providers. The petitioners (staff members of TATA Indicom) hacked the Electronic Serial Number (hereinafter referred to as “ESN”). The Mobile Identification Number (MIN) of Reliance handsets were irreversibly integrated with ESN, the reprogramming of ESN made the device would be validated by Petitioner’s service provider and not by Reliance Infocomm.

Questions before the Court: i) Whether a telephone handset is a “Computer” under Section 2(1)(i) of the IT Act?

  1. ii) Whether manipulation of ESN programmed into a mobile handset amounts to an alteration of source code under Section 65 of the IT Act?

Decision: (i) Section 2(1)(i) of the IT Act provides that a “computer” means any electronic, magnetic, optical, or other high-speed data processing device or system which performs logical, arithmetic, and memory functions by manipulations of electronic, magnetic, or optical impulses, and includes all input, output, processing, storage, computer software or communication facilities which are connected or related to the computer in a computer system or computer network. Hence, a telephone handset is covered under the ambit of “computer” as defined under Section 2(1)(i) of the IT Act.

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(ii)  Alteration of ESN makes exclusively used handsets usable by other service providers like TATA Indicomm. Therefore, alteration of ESN is an offence under Section 65 of the IT Act because every service provider has to maintain its own SID code and give its customers a specific number to each instrument used to avail the services provided. Therefore, the offence registered against the petitioners cannot be quashed with regard to Section 65 of the IT Act.

  1. Shankar v. State Rep[5]

Facts: The petitioner approached the Court under Section 482, CrPC to quash the charge sheet filed against him. The petitioner secured unauthorized access to the protected system of the Legal Advisor of Directorate of Vigilance and Anti-Corruption (DVAC) and was charged under Sections 66, 70, and 72 of the IT Act.

Decision: The Court observed that the charge sheet filed against the petitioner cannot be quashed with respect to the law concerning non-granting of sanction of prosecution under Section 72 of the IT Act.

  1. Christian Louboutin SAS v. Nakul Bajaj & Ors.[6]

Facts: The Complainant, a Luxury shoes manufacturer filed a suit seeking an injunction against an e-commerce portal www.darveys.com for indulging in a Trademark violation with the seller of spurious goods.

The question before the Court was whether the defendant’s use of the plaintiff’s mark, logos, and image are protected under Section 79 of the IT Act.

Decision: The Court observed that the defendant is more than an intermediary on the ground that the website has full control over the products being sold via its platform. It first identifies and then promotes third parties to sell their products. The Court further said that active participation by an e-commerce platform would exempt it from the rights provided to intermediaries under Section 79 of the IT Act.

  1. Avnish Bajaj v. State (NCT) of Delhi[7]

Facts: Avnish Bajaj, the CEO of Bazee.com was arrested under Section 67 of the IT Act for the broadcasting of cyber pornography. Someone else had sold copies of a CD containing pornographic material through the bazee.com website.

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Decision: The Court noted that Mr. Bajaj was nowhere involved in the broadcasting of pornographic material. Also, the pornographic material could not be viewed on the Bazee.com website. But Bazee.com receives a commission from the sales and earns revenue for advertisements carried on via its web pages.

The Court further observed that the evidence collected indicates that the offence of cyber pornography cannot be attributed to Bazee.com but to some other person. The Court granted bail to Mr. Bajaj subject to the furnishing of 2 sureties Rs. 1 lakh each. However, the burden lies on the accused that he was merely the service provider and does not provide content.

  1. State of Tamil Nadu v. Suhas Katti[8]

The instant case is a landmark case in the Cyber Law regime for its efficient handling made the conviction possible within 7 months from the date of filing the FIR.

Facts: The accused was a family friend of the victim and wanted to marry her but she married another man which resulted in a Divorce. After her divorce, the accused persuaded her again and on her reluctance to marrying him, he took the course of harassment through the Internet. The accused opened a false e-mail account in the name of the victim and posted defamatory, obscene, and annoying information about the victim.

A charge-sheet was filed against the accused person under Section 67 of the IT Act and Section 469 and 509 of the Indian Penal Code, 1860.

Decision: The Additional Chief Metropolitan Magistrate, Egmore convicted the accused person under Section 469 and 509 of the Indian Penal Code, 1860 and Section 67 of the IT Act. The accused was subjected to the Rigorous Imprisonment of 2 years along with a fine of Rs. 500 under Section 469 of the IPC, Simple Imprisonment of 1 year along with a fine of Rs. 500 under Section 509 of the IPC, and Rigorous Imprisonment of 2 years along with a fine of Rs. 4,000 under Section 67 of the IT Act.

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  1. CBI v. Arif Azim (Sony Sambandh case)

A website called www.sony-sambandh.com enabled NRIs to send Sony products to their Indian friends and relatives after online payment for the same.

In May 2002, someone logged into the website under the name of Barbara Campa and ordered a Sony Colour TV set along with a cordless telephone for one Arif Azim in Noida. She paid through her credit card and the said order was delivered to Arif Azim. However, the credit card agency informed the company that it was an unauthorized payment as the real owner denied any such purchase.

A complaint was therefore lodged with CBI and further, a case under Sections 418, 419, and 420 of the Indian Penal Code, 1860 was registered. The investigations concluded that Arif Azim while working at a call center in Noida, got access to the credit card details of Barbara Campa which he misused.

The Court convicted Arif Azim but being a young boy and a first-time convict, the Court’s approach was lenient towards him. The Court released the convicted person on probation for 1 year. This was one among the landmark cases of Cyber Law because it displayed that the Indian Penal Code, 1860 can be an effective legislation to rely on when the IT Act is not exhaustive.

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  1. Pune Citibank Mphasis Call Center Fraud

Facts: In 2005, US $ 3,50,000 were dishonestly transferred from the Citibank accounts of four US customers through the internet to few bogus accounts. The employees gained the confidence of the customer and obtained their PINs under the impression that they would be a helping hand to those customers to deal with difficult situations. They were not decoding encrypted software or breathing through firewalls, instead, they identified loopholes in the MphasiS system.

Decision: The Court observed that the accused in this case are the ex-employees of the MphasiS call center. The employees there are checked whenever they enter or exit. Therefore, it is clear that the employees must have memorized the numbers. The service that was used to transfer the funds was SWIFT i.e. society for worldwide interbank financial telecommunication. The crime was committed using unauthorized access to the electronic accounts of the customers. Therefore this case falls within the domain of ‘cyber crimes”. The IT Act is broad enough to accommodate these aspects of crimes and any offense under the IPC with the use of electronic documents can be put at the same level as the crimes with written documents.

The court held that section 43(a) of the IT Act, 2000 is applicable because of the presence of the nature of unauthorized access that is involved to commit transactions. The accused were also charged under section 66 of the IT Act, 2000 and section 420 i.e. cheating, 465,467 and 471 of The Indian Penal Code, 1860.

  1. SMC Pneumatics (India) Pvt. Ltd. vs. Jogesh Kwatra[9]

Facts: In this case, Defendant Jogesh Kwatra was an employee of the plaintiff’s company. He started sending derogatory, defamatory, vulgar, abusive, and filthy emails to his employers and to different subsidiaries of the said company all over the world to defame the company and its Managing Director Mr. R K Malhotra. In the investigations, it was found that the email originated from a Cyber Cafe in New Delhi. The Cybercafé attendant identified the defendant during the enquiry. On 11 May 2011, Defendant was terminated of the services by the plaintiff.

Decision: The plaintiffs are not entitled to relief of perpetual injunction as prayed because the court did not qualify as certified evidence under section 65B of the Indian Evidence Act. Due to the absence of direct evidence that it was the defendant who was sending these emails, the court was not in a position to accept even the strongest evidence. The court also restrained the defendant from publishing, transmitting any information in the Cyberspace which is derogatory or abusive of the plaintiffs.

Conclusion

The Cyber Law regime is governed by the IT Act and the Rules made thereunder. Also, one may take recourse to the provisions of the Indian Penal Code, 1860 when the IT Act is unable to provide for any specific type of offence or if it does not contain exhaustive provisions with respect to an offence.

However, the Cyber Law regime is still not competent enough to deal with all sorts of Cyber Crimes that exist at this moment. With the country moving towards the ‘Digital India’ movement, the Cyber Crimes are evolving constantly and new kinds of Cyber Crimes enter the Cyber Law regime each day. The Cyber Law regime in India is weaker than what exists in other nations.

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Hence, the Cyber Law regime in India needs extensive reforms to deal with the huge spike of Cyber Crimes each year.

[1] “Crime in India – 2019” Snapshots (States/UTs), NCRB, available at: https://ncrb.gov.in/sites/default/files/CII%202019%20SNAPSHOTS%20STATES.pdf (Last visited on 25th Feb; 2021)

[2] (2013) 12 SCC 73

[3] 2015 SCC OnLine SC 1242

[4] 2005 CriLJ 4314

[5] Crl. O.P. No. 6628 of 2010

[6] (2018) 253 DLT 728

[7] (2008) 150 DLT 769

[8] CC No. 4680 of 2004

[9] CM APPL. No. 33474 of 2016

Categories
Blog Intellectual Property Law

Theories of Intellectual Property Rights

By: Vallabhi Rastogi

INTRODUCTION

With the introduction and implementation of ‘Digital India’, major segment of the Indian population has shifted to undertaking online transactions and availing the services offered over the internet. This shift is also because the Government has offered additional benefits for online transactions so as to promote digitization. This increased use of internet has largely exposed Intellectual Property to several risks since it has made “illegitimate copying and reproducing quite easier.”[1] According to World Intellectual Property Organization, “Intellectual Property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce”. Intellectual property being intangible needs to be protected by law in the same sense as corporeal property and therefore, copyright, patent, trademark, trade secrets are some mechanisms under intellectual property rights (IPR) that protect novel innovation from being imitated without permission.

IPR is not a recent concept rather it has evolved a lot subsequent to the industrial revolution in Europe when industrial advancement was at its peak. However, codification of laws relating to intellectual property started in the 19th century. Since then, “IPR have been instilling confidence among creators that their intellectual property is protected, thereby encouraging further innovations.”[2]

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IPR has played a significant role in keeping original ideas and technical productions safe from being illegally copied and manipulated and has fostered creativity and innovations. In order to safeguard such intangible property, many industries across the globe have resorted to IP rights. Sports, Information Technology, Fashion industry, Entertainment, Biotechnology, Pharmaceutical industry are some of those sectors that have readily adapted IPR with the view of legally “safeguarding ownership, thereby, providing distinct identity”[3] and encouraging innovators to conceive and create more ideas.

Intellectual Property Rights acts as a motivation by instilling a sense of trust and ownership in the creators as their creations are safe even when available over the internet. Considering the technological advancement and innovative creations in the current times, it has become a necessity to legally protect them and therefore, enforcement of intellectual property rights backs such inventions and artworks.

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THEORIES OF INTELLECTUAL PROPERTY RIGHTS

Intellectual Property and the importance of IPR traces its origin back to and relevance from the theories of renowned philosophers such as John Locke, Immanuel Kant, John Stuart Mill, Jeremy Bentham, Georg Hegel, etc. The ideologies and theories propounded by them act as the supporting pillar of the jurisprudential aspect of intellectual property rights. The theories of IPR that this paper will talk about are

  1. The Natural Rights Theory
  2. Ethic and Reward Theory
  3. Utilitarian or Incentive Theory
  4. Personhood Theory

 

THE NATURAL RIGHTS THEORY

This theory is fundamentally based on John Locke’s concept that an owner possesses a natural right over the things that he produces with the help of his own labor and efforts, either physical or intellectual. Therefore, ownership arises from the labor and innovation of person creating it. Locke believed that “individuals are entitled to control the fruits of their own labor. In his perspective, a person, who cultivates crops by using his own labor or creates a new invention by putting his efforts, naturally obtains property rights,”[4] merely by the virtue of adding his own labor. Similarly, the natural rights theory of intellectual property reflects that an individual naturally acquires ownership of the artwork that he creates or literary work that he authors because he added his own intellectual labor in it.

Locke based his theory on the idea that when a person puts his labor in an unowned object, his labor gets amalgamated with the new object that is then created, which cannot be separated without causing damage to the novel creation thus made. The creator then acquires natural rights over the object in which he applied his intellectual labor. Once the person acquires the property right, his original creation is protected from being used, transferred or manipulated by another person. Any such breach of the intellectual property right of the creator / owner would be against the law.

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ETHIC AND REWARD THEORY

An owner or creator is legally protected under IPR for his novel creations by granting him exclusive rights over the work he produces. These exclusive rights include the right to enjoy the property, exclude others from enjoying it and to dispose the property in any manner he likes. The creator is rewarded for contributing to the welfare of the society by producing his work, however, when an ethical or moral perspective is involved while rewarding it falls under this theory of intellectual property rights. This theory emanates from the concept that granting exclusive rights on an original work are “an expression of gratitude to an author for doing more than the society expects or feels that they are obliged to do.”[5] It implies that other than the profit or remuneration for his production, if any, the individual should also be granted exclusive legal rights over the property so produced since he contributed for the betterment of community.

Ethic and Reward Theory suggests that for producing the original work, the creator might have been given some reward in form of royalty or otherwise, and then the creator should be rewarded again with exclusive legal rights over his novel production since he contributed something for ‘social utility’ that would benefit the society at large. The thinkers supporting this theory believe that the individual who put his intellectual labor for social good must be fairly compensated with his contribution being respected and this can be done by granting him exclusive rights. These exclusive rights act as moral and ethical rewards since the creator would be legally protected under IPR.

Critiques against this theory have contended that just like a person is not punished twice for doing something offensive that causes displeasure to the people similarly, a person who has contributed to the society should also not be rewarded twice.

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UTILITARIAN OR INCENTIVE THEORY

Utilitarianism is “greatest good for the greatest number” which basically implies happiness of the maximum number of people. Therefore, the conduct which causes happiness of a large number of people should be appreciated and promoted whereas the conduct which causes displeasure to the society should be avoided or discouraged. Propounded by Jeremy Bentham and John S. Mill, the concept of utilitarianism helps in socio-cultural and economical progress. Likewise, while inferring it in intellectual property utilitarian concept plays a significant role.

As and when a person creates a product or there is technological innovation within a community, the society benefits from the advancement and progress. Since this progress benefits and causes happiness of the society at large, such innovation and creations are to be promoted and encouraged.  Such encouragement can be done by granting exclusive rights to the creator as he has worked hard to empower the society and cause pleasure to the maximum number of people. This will not only create a sense of motivation to put in more efforts but would also make him believe that he and his work are rightfully respected and recognized. Therefore, the authorities or administration are expected to grant such rights and recognize their efforts.

However, while creating and designing the work, the cost of production might be too high. So, the incentive given to the creator might not be sufficient enough to cover the costs incurred. This might discourage the creator as well, thus, preventing him to further experiment and produce.

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PERSONHOOD THEORY

This jurisprudential theory was propounded by famous thinkers like Immanuel Kant and Georg Hegel. Personhood theory of intellectual property rights states that while applying labor to produce some work, a person also incorporates some part of his personality in the creation. An “individual’s personality growth is inherent”[6] and thereby, constitutes an integral part of the creative works. Since exclusive property rights are granted over the creative works and original productions, the creator also gains rights over the personality that is developed during the process. This right to “protect the development of personality extends to material things”[7] as well.

These rights emphasize more on preserving and safeguarding interests related to personality rather than merely protecting the monetary interests. Other than the right to fiscal advantage, the maker should also be given the right to safeguard his personality infused with the creation. Intellectual Property Rights should include protection of both creativity and every other thing incorporated in it.

There exists a loophole in this theory if we consider the fact that once the original work is produced, it is distinct from the creator. As the work becomes available to the public, it is up to them as how they receive and treat it. Therefore, it is not dependent on the person creating it.

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CONCLUSION

It is a well-established fact that Intellectual Property Rights have been quite effective and successful in protecting the novel creations that have facilitated in the upliftment and growth of any nation. They have bolstered and encouraged the society to produce more. It is quite evident that in this age of technological development and increased creation of artworks, competitiveness has found its way. As a result, people might indulge in unfair practices to manipulate or copy other’s creations or use them illegitimately to create something new. To mitigate such incidences, intellectual property rights through patents, trademarks, copyrights and trade secrets have found a permanent place. It ensures that there is no unhealthy competition or any kind of unfair practices. Intellectual Property rights acts as incentives to the individuals who are in the field of research and experimentation. Such encouragements give them a feeling of recognition. These rights not only provide ownership right but also recognize and reward them for their efforts and labor. It protects the economic interests of creators as well.

Each theory has its own approach and perspective of inferring intellectual property rights. There is no specific right or wrong with regards to a theory. Different individuals might relate and favor different theories.

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There has been a recent surge in the requirement and use of IPR laws in India. Indian Courts of Law have been reasonably strict in regulating intellectual property rights and awarding punitive damages to deter further infringement. “Prioritizing IPR has become necessary for socio-economic development.”[8]

Based on these theories there are some loopholes and incongruities which need to be looked into. Moreover, with changing times and continuous advancement, there can be several challenges which the existing IPR laws might have to cope with. The coming years would be very essential to evaluate the progress and improvisation of domestic IPR laws in comparison with the international ones. It would be interesting to see how IPR laws unfold in the upcoming years.

[1] The Effects of the Internet on Intellectual Property Rights, SACRAMENTO INTELLECTUAL PROPERTY LAW BLOG (Mar 27, 2017). https://www.petersonwatts.com/blog/2017/03/the-effects-of-the-internet-on-intellectual-propertyrights/#:~:text=Patents%2C%20trademarks%20and%20copyrights%20are,protected%20to %20the%20fullest%20extent.

[2] Varun Sharma & Gautam Kumar, Patent Litigation – Trend and Development, CHAMBERS AND PARTNERS, (2020).https://practiceguides.chambers.com/practice-guides/patent-litigation-2020/india/trends-and-developments.

[3]Singh and Associates, India: Role of IPR in Sports, MONDAQ (May 22, 2019). https://www.mondaq.com/india/sport/808132/role-of-ipr-in-sports

[4] Adam Moore & Ken Himma, Intellectual Property, Stanford Encyclopedia of Philosophy (Oct 10, 2018) https://plato.stanford.edu/entries/intellectual-property/.

[5] L. BENTLY & B. SHERMAN, INTELLECTUAL PROPERTY LAW 36 (3RD ED. 2008).

[6] Jane Secker, Considering Theories of Intellectual Property on World IP Day, UK COPYRIGHT LITERACY, (2018), https://copyrightliteracy.org/2018/04/26/considering-theories-of-intellectual-property-on-world-ip-day/.

[7] Mikhalien du Bois, Justificatory Theories for Intellectual Property Viewed Through the Constitutional Prism, PER/PELJ (2018). http://www.scielo.org.za/pdf/pelj/v21n1/19.pdf.

[8] Varun Sharma & Gautam Kumar, Patent Litigation – Trend and Development, CHAMBERS AND PARTNERS, (2020).https://practiceguides.chambers.com/practice-guides/patent-litigation-2020/india/trends-and-developments.

Categories
Criminal Law

Plea Bargaining in India and USA -A Comparative Study

By: Muskan Sharma

Concept of Plea Bargaining

Plea Bargaining is a process where the accused is asked to plead guilty in exchange of the judge acting lenient while awarding punishment or considering the seriousness of the offence. It is derived from the Latin phrase ‘Nolo Contendere’ which means ‘I do not wish to contend’ i.e. a plea of ‘No contest’. Plea Bargaining is a situation where the accused admits that the charges levelled against him are true and that he will not contend a query to the Court to decide over his guilt.

The concept of Plea Bargaining was not originally introduced into the Indian legal system but into USA. However, the Law Commission’s efforts promoted the insertion of the provisions concerning Plea Bargaining via its 142nd, 154th, and 177th reports. A new chapter on ‘Plea Bargaining’ was introduced into the Criminal Procedure Code based on the recommendations of the Law Commission for certain offences.

There are three types of Plea Bargaining namely, Sentence Bargaining, Charge Bargaining, and Fact Bargaining.

The concept of ‘Plea Bargaining’ is operative in both India and USA but the practice is not identical. However, it is pertinent to know about the concept of Plea Bargaining and landmark cases associated to it in both legal systems separately for a fruitful comparison between the two.

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Plea Bargaining in USA

In USA, the accused can put forward one of the three pleas i.e. Guilty, Not Guilty, and Nolo Contendere. Under the doctrine of Nolo Contendere, the plea is treated as an implied confession of guilt or that the Court will decide on the point of his guilt.

However, the Court is not bound to accept such a plea of the accused. It is the discretionary power of the Court to either accept or reject such plea, considering the facts and circumstances of each case presented to it. The Court is supposed to ensure that the plea should be put forward voluntarily by the accused and absence of duress and coercion. The accused must receive the protection of secrecy. Plea Bargaining gained momentum due to the overcrowding in prisons of USA.

Landmark Cases in USA

  • State exrel Clark Adams[1]

In the instant case, the Court explained the doctrine of ‘Nolo Contendere’. The Court held that the plea of ‘Nolo Contendere’ also known as ‘Plea of Nolvut’ means the accused does not wish to contend.

  • United States Risfield[2]

The Court observed that in a criminal action in which an application for Plea Bargaining has been made, the adjudication by the Court in relation to the plea of guilty is not necessary. However, the Court may impose sentence on the accused person immediately.

  • Lott United States[3]

The Court held that the plea being tantamount to an admission of guilt, is not conviction but merely a determination of guilt.

  • Bordenkircher Haynes[4]

In this case, the US Supreme Court upheld the constitutionality of Plea Bargaining while awarding life imprisonment to the accused person who rejected to plead guilty for imprisonment for a term of five years. The Supreme Court observed a slight possibility that the accused person may be coerced to choose among the lesser of the two punishments.

The Supreme Court further observed that there is no probability of coercion or duress if the accused person is free to either accept or reject the offer made by the prosecutor during the negotiation process for Plea Bargaining.

  • Brady United States[5]

In the instant case, the Supreme Court held that the consensus reached out of fear that the trial will result into death penalty will not make the process of Plea Bargaining illegitimate. If the process of Plea Bargaining has been properly conducted and controlled, it is legitimate.

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Plea Bargaining in India

Section 265A to 265L (Chapter XXI A) of the Criminal Procedure Code, 1973 (hereinafter referred to as “CrPC”) contain provisions concerning ‘Plea Bargaining’.

Section 265A of CrPC provides who is eligible to take benefit of Plea Bargaining. According to the provisions of Section 265A, any accused may take the course of Plea Bargaining except the accused charged with offences that are punishable with death or life imprisonment or imprisonment for a term more than seven years. Also, an accused charged with an offence against a woman or a child below fourteen years of age or affecting the socio-economic conditions of the country, is also not allowed to take the course of Plea Bargaining.

Section 265B provides for the procedure to file an application for Plea Bargaining. The application must contain all details of the case accompanied by a sworn affidavit. Afterwards, the Court may examine the accused to satisfy itself of the fact that the accused has filed such application voluntarily. If the accused satisfies the Court of the voluntariness, the Court provides some time for the mutual satisfactory disposition of the case. If in case, the accused fails to satisfy the Court that he has filed the application voluntarily or that he has been convicted with the same offence previously, the Court may proceed from the stage the application has been filed before it.

Section 265C contains guidelines for mutually satisfactory disposition of the case. It states that the Court shall issue notice to the public prosecutor, if the case instituted on a police report, the accused, and the victim to participate in a meeting to reach at a satisfactory disposition of the case. However, the Court must ensure that the process be completed voluntarily and the accused may participate with his pleader, if he desires so.

Section 265D to Section 265I contain provisions concerning the report of mutually satisfactory disposition, disposal of the case, judgment of the Court, finality of the judgment, power of the Court in plea bargaining, and period of detention already undergone by the accused be set off against the sentence of imprisonment.

Landmark Cases in India

  • Murlidhar Meghraj Loya State of Maharashtra[6]

In the instant case, J. Krishna Iyer criticized the practice of Plea Bargaining. He observed that the Trial Magistrate is burdened with cases and hence, approves the secret dealings of Plea Bargaining. He further observed, “The businessman culprit, confronted by a sure prospect of the agony and ignominy of tenancy of a prison cell, ‘trades out‘ of the situation, the bargain being a plea of guilt, coupled with a promise of ‘no jail‘. These advance arrangements please everyone except the distant victim, the silent society…”

  • Kachhia Patel Shantilal Koderlal State of Gujarat and Anr.[7]

In this case as well, the Supreme Court criticized the concept of Plea Bargaining. The Court held that Plea Bargaining is an unconstitutional process as it encourages corruption and pollutes the concept of justice.

  • State of Uttar Pradesh Chandrika[8]

The Supreme Court held that it is a settled law that a criminal case cannot be disposed off merely on the basis of Plea Bargaining. It was further observed that it is the constitutional duty of the Court to consider the merits of the case and award appropriate sentence despite the confession of the guilt by the accused person.  Mere confession of the guilt by the accused person cannot be a reason for awarding lesser punishment.

However, there has been a shift in the judicial thinking with the passage of time.

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  • State of Gujarat Natwar Harchandji Thakor[9]

In the instant case, the Gujarat High Court favoured the process of Plea Bargaining and held that the object is to provide easy, cheap, and expeditious resolution of disputes including the trial in criminal cases and that it prevents the pendency and delay in disposal of the administration of justice.

  • Vijay Moses Das CBI[10]

In the instant case, a person was accused of supplying of sub-standardized material to ONGC at a wrong port and thereby, causing ONGC to suffer huge losses. CBI completed the investigation and started prosecution against the accused person under Section 420, 468, and 471 of the Indian Penal Code, 1860. The accused person took the course of Plea Bargaining. But the Trial Court rejected the application of Plea Bargaining on the ground that it was not accompanied by an affidavit as stipulated under Section 265B and no compensation was fixed. However, the Uttarakhand High Court directed the Trial Court to accept the application of Plea Bargaining.

  • Thippaswamy State of Karnataka[11]

In the instant case, the Supreme Court held that inducing an accused person to plead guilty under any assurance or promise is unconstitutional for being violative of Article 21 of the Indian Constitution. It further observed that in such cases, the Court must set aside the conviction and direct the case to the Trial Court to give accused person the right to defend himself and if found guilty, the Trial Court may award appropriate punishment to him.

Plea Bargaining in India and USA: Comparative Analysis

Though the concept of ‘Plea Bargaining’ as adopted into the Indian legal system has been borrowed from USA, it is still distinguishable from the operation of ‘Plea Bargaining’ in USA. Following are some of the major differences that exist between the concept of ‘Plea Bargaining’ as operative in India and USA:

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  1. Nature of Offence

In USA, there is no provision as to the prohibition on plea bargaining in certain offences. An accused person charged with any offence may take the course of Plea Bargaining. However, in India, there are exceptions as contained in Section 265A. Following categories of accused persons cannot take the course of Plea Bargaining in India:

  1. Accused person charged with an offence punishable with death
  2. Accused person charged with an offence punishable with life imprisonment
  3. Accused person charged with an offence punishable with imprisonment of more than seven years
  4. Accused person charged with an offence against women
  5. Accused person charged with an offence against a child below fourteen years of age
  6. Accused person charged with an offence that affects socio-economic conditions of the country
  7. Role of Victim in Proceedings

In Indian Law, the victim has an important role in the proceedings of Plea Bargaining. The victim has the power to refuse or veto if unable to reach a mutually satisfactory disposition. However, in USA, the victim does not have an active role to play in the proceedings of Plea Bargaining.

  1. Mechanisms available for enforceability

In USA, an application for Plea Bargaining is filed only after the negotiation process between the accused person and the prosecutor is complete. However, in India, the negotiation process with the accused person does not even start before the filing of the application of the Plea Bargaining to ensure that the application of Plea Bargaining is filed voluntarily by the accused. Therefore, there is less chance of the accused being coerced or secret dealings for filing an application for Plea Bargaining.

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  1. Discretion of the Judge

In USA, the judge does not exercise discretionary power while accepting an application for Plea Bargaining. However, in Indian legal system, the judge has discretionary powers to either reject or accept an application for Plea Bargaining filed by the accused person.

  1. Finality

Under the Indian legal system, if the Court thinks the punishment awarded in any case of Plea Bargaining is insufficient or is guarded by unfair circumstances, it may be set aside either by an SLP under Article 136 or a writ petition under Articles 226 and 227 of the Indian Constitution. However, in USA, it reaches its finality.

 

Conclusion

The conviction rate via Plea Bargaining in the USA is as high as nearly 90% whereas in India, it is not even close to 10% of the criminal cases. This disparity exists due to the differences that exist between the concept of Plea Bargaining as practiced in USA and India.

Though the conviction rate in India is way too low as compared to the conviction rate in USA, it is effective in ensuring that the application of Plea Bargaining has been filed voluntarily. Justice may be delayed but must not be denied. In India, an accused person does not take the course of Plea Bargaining to choose the lesser among the punishments but is a voluntary action. Hence, it is high probability that an innocent person will not be awarded punishment in India by way of Plea Bargaining.

However, speedy disposal of cases is the need of the hour. Hence, the legislature must go for reforms and provide adequate infrastructure to the judiciary to reduce the number of undertrial prisoners.

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[1] 363 US 807

[2] 340 US 914

[3] 367 US 421

[4] 434 US 357 (1978)

[5] 397 US 742 (1970)

[6] AIR 1976 SC 1929

[7] 1980 Cr LJ 553

[8] 2000 Cr LJ 384

[9] (2005) Cr LJ 2957

[10] Crl. (Misc.) Application No. 1037/2006

[11] (1983) 1 SCC 194

Categories
Intellectual Property Law

Compulsory Licensing in India

By: Rajat Nischal

Prominently known as World Intellectual Property Organization [WIPO] elucidates ‘Patent’ as an arranged right specifically for inventions. Lawfully, a patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. To get a patent, technical information about the invention must be disclosed to the public in a patent application [1]. An individual who owns/possesses the ownership of the patent is hereinafter referred to as, patent owner/ patentee. Officially, the patent owner shall possess an exclusive and special right on his invention for a limited duration of 20 long years, moreover, the patentee also holds an extraordinary right of eliminating individuals/ groups from using his/her patented product without a formalized permission. Notwithstanding the aforesaid, under specific crucial circumstances and situations, a compulsory license to make use of a patented product may be given to a third party. This impression of “compulsory licensing in India” has been given in Chapter XVI of the Indian Patents Act, 1970 [2].

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OUTLINES OF COMPULSORY LICENSING AS PER PATENTS ACT

Transmogrifying the true concept of compulsory licenses to a very simple and layman’s language would make us understand that these licenses are authorizations provided to a foreign/ alien party by the hon’ble controller general in order to make the usage of a specific patented creation without the approval of the patent owner. The outlines of compulsory licensing are very known at both, international and national levels with the reference cited in TRIPS Agreement for former and Indian Patent Act, 1970[1] for the latter one. Nevertheless, the presence of several preconditions is truly enshrined under sections 84-92 of the Indian Patent Act, 1970 [2] which stands as crucial to be satisfied if a compulsory license is to be issued in favor of a third party.

As enshrined under Section 84 of the Indian Patent Act[3], any individual, notwithstanding to the factum of possession of the license of the concerned patent, can submit a humble appeal to the hon’ble controller general requesting for the permission of compulsory license on expiry of three years if, the following bullets are satisfied;

  • In the case where the lawfully protected invention fails to work in India
  • In the case where the rational requisites of the public have not been fulfilled
  • In the case where the invention is offered at an unfordable price.

Moreover, as enshrined under section 92 of the Indian Patent Act, 1970 [4]a suo moto cognizance may also be issued to the compulsory licenses by the will of the hon’ble controller general if there is either a “national emergency” or “extreme urgency” or in cases of “public non-commercial use”. The hon’ble controller may additionally take into account certain more aspects like of the nature of the patented invention and, The Controller takes into account some more aspects like the nature of the invention, the competence of the applicant to use the creation for public welfare and benefit nevertheless, the absolute discretion to grant the compulsory license falls with the hon’ble controller general. [5]

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ISSUANCE OF COMPULSORY LICENSE

First of its kind of compulsory license by a patent office in India was done on an appreciable date of 9th march of 2012 to Natco Pharma for the generic production of Bayer Corporation’s Nexavar (medication used for treating Kidney and Liver Cancer). Bayer Corporation’s Nexavar sold the medications for an exorbitant and superfluous price costing Rs. 2,80,000 for one month’s dosage. The Natco Pharma was assenting to sell the same dosage at a sum of Rs. 9,000 which is tremendously less than the former price of the medication (as offered by Bayer’s). With a major price drop, people belonging to lower-income groups became eligible to afford the drug created for the welfare of the people. Taking merit of the aforesaid, all the three bullets of section 84 of the Indian Patent Act, 1970 [6] are satisfied and henceforth, the pronouncement was produced for the profit of people.

In several other cases related to the issuance of compulsory licenses in the pharmaceutical industry, the Hon’ble controller general rejected the plea for numerous reasons. The supposed was done due to;

  • failing to prove prima facie case
  • failure to prove positive public use of the creation
  • not applying for a license of patent prior to applying for a compulsory license.[7]

It is a strong belief in the legal facet of patents that getting a creation registered under the law does not absolutely fall out adequate moreover, the judiciary must understand the appearance of the entire case, submissions by the patent holder, and the defense of the same.[8] In few case laws, the Indian courts have relined that the regulations and rules contrary to the anti-competitive practices in the Competition Act, 2002[9] and the obligatory rules of compulsory licensing in the Indian Patent Act, 1970 [10]are not in exclusion of each other; rather, on the flipped side of the coin, they are to be read together. The doubt over the choice of anti-competitive practices may perhaps also be thought out by the Hon’ble controller general. Nevertheless, in case the Competition Commission of India [CCI] treasures that the patent holder’s behaviour is anti-competitive and the said attains an utmost conclusiveness then, the Hon’ble controller will also move further to issue estoppel-the patentee would be estopped from contending to the contrary.[11]

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The rational legal approach in regard to the grant of compulsory license states, the regulations and obligatory rules exists for a sole purpose of people’s wellbeing and the said shall not be used for any other purpose which may directly or indirectly reduce the positive rights of the patentee. A lucid balance of rights/ regulations and, the execution of the same shall justly exist.

CONCLUSION

The laws referring the compulsory licensing should be exercised rationally, cautiously and wisely because it stands straight as an exception to the sober rule of patent. The regulations are not absolute in nature but rather are partially aligned were, neither complete patent protection is provided, nor it is denied wholly. Because of its application in the medical field, the pharmaceutical companies in order to protect their product from compulsory licensing are required to price their patented module in harmony to the financial status of the nation. And owing to the above stated fact, the concept of compulsory licensing as a law has indeed upshifted as an expectational hope for the financially challenged patients. Bearing in mind the financial conditions of India, compulsory licensing as an obligatory regulation is unquestionably a major necessity.

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But then again, the distress faces out when the warm ray of light is flashed towards the contest of the two flanks, the first where it has to obey the international norms of patent protection and the other in which all the arrangements are done in order to safeguard and protect the people of the nation.

[1] Ibid

[2] The Indian Patent Act, 1970, § 84-92, The Gazette of India, pt. II sec. 1 (19th September, 1970).

[3] The Indian Patent Act, 1970, § 84, The Gazette of India, pt. II sec. 1 (19th September, 1970).

[4] The Indian Patent Act, 1970, § 92, The Gazette of India, pt. II sec. 1 (19th September, 1970).

[5] https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm

[6] The Indian Patent Act, 1970, § 84, The Gazette of India, pt. II sec. 1 (19th September, 1970).

[7] http://www.khuranaandkhurana.com/2017/08/03/compulsory-licensing/

[8] Franz Xaver Huemer v. New Yash Engineers, AIR 1997 Delhi 79, 1996 (25) (India).

[9] The Competition Act, 2002, The Gazette of India, pt. II sec. 1 (31st March, 2003).

[10] The Indian Patent Act, 1970, The Gazette of India, pt. II sec. 1 (19th September, 1970).

[11] Koninklijke Philips Electronics N.V. v. Rajesh Bansal and Others, MANU/DE/2436/2018 (India).

[1] https://www.wipo.int/patents/en/

[2] The Indian Patent Act, 1970, The Gazette of India, pt. II sec. 1 (19th September, 1970).

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Categories
Blog

Civil Courts System In India and their Jurisdiction

By: Rajat Nischal 

OPERATIONS OF CIVIL COURTS IN INDIA

The Constitution of Republic of India in its very structuring puts down certain framework in respect to the Indian Judicial System. The administration of our country is sensed upon the federal system of governance making the dispersal of power between the Centre and the States. Even so, the Constitution of India establishes a single integrated judicial system encompassing courts to administer both Central and State commandments. The apex court of India located in the capital of the country, New Delhi is the supreme court i.e., the court of highest appeal. The second most authority after the apex body are the various High Courts at the state level which function for one or more number of states. furthermore, down the line after these major bodies, establishments of the district and subordinate courts also prevails at the lower tier levels in the territory of India. In order to extend the functioning of the Courts, there exist specialised tribunals to adjudicate sector specific claims such as labour, consumer, service matter disputes.

The civil court system of India is one of the most primogenital legal systems in the world history.  The respectful plays a significant element of the inheritance India proclaimed from the colonial rule in the regime of Britishers. The contemporary framework of the legal system in India is specifically pointed down in the Constitution of India where tremendous levels of the judiciary are elucidated in a hierarchical setup of establishments. These courts are majorly pointed above but will be elucidated in a pragmatic appearance below followed by a detail explanation of their functioning.

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THE APEX BODY

The apex judicial authority of the country i.e., the Supreme Court of India came into existence on the January 28th of 1950. It came into existence after substituting the two of them, the federal court system and the judicial committee of the privy council which were legitimately the supreme authority of the Indian court system at that time. The honourable Constitution structured in 1950 envisioned a little transformed civil court system. In the said specific, the highest court of appeal was the Supreme Court with a Chief Justice and 7 additional justices. nevertheless, the parliament of India assented the authority to increase the number of judges in the approaching years. In the contemporary situation, post the commencement of the Supreme Court (Number of Judges) Bill of 2019 into law, the judicial strength has been increased to 34 in number. The sanctioned strength of Supreme Court judges was increased days after the Chief Justice wrote to Prime Minister Narendra Modi to increase the number of judges in the top court.

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The aforesaid acts as an adjudicator and interpreter which can be elaborated with the help of different jurisdictions bestowed with the court. The roles of the apex legal authority as an adjudicator and interpreter can be clearly understood through the original and appellate jurisdictions.

As enshrined under the Article 131 of the Constitution of India [1], the Supreme Court is granted with the original jurisdiction. This power of jurisdiction is exercised to adjudicate the disputes between Union and one or more states and between two or more states. The respectful must involve some question of law or fact on which the existence or extent of legal rights can be adjudicated. For an illustration; River disputes between 2 or more states.

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As enshrined under the Article 32 of the Constitution of India [2], extends a wide-ranging original jurisdiction to the Supreme Court for the enforcement of fundamental rights of the citizens, through issuing directions, orders and writs. The latter is more commonly titled as, the ‘Writ Jurisdiction’. The appellate jurisdiction residing with the apex court of India can be prayed by an order approved by the high court. Appeals submitted to the honourable supreme court against the lower court of appeals can range from any judgement, decree or final order of the Court in both criminal and civil cases. Moreover, asper the Article 136 of the Constitution of India [3] the supreme court can even practice the wide appellate jurisdiction over all Courts and Tribunals. Underneath with its own sense of discretion, the Hon’ble Court may assent a special leave appeal to any decree, determination, judgment, order or sentence in any cause or matter passed or made by any Court within its own jurisdiction.

Alongside being an interpreter, as enshrined under Article 143 of the Constitution [4], the court of the highest appeal also acts as an advisor to the Hon’ble President of the Union of India. The official title for the said is “Presidential Reference” and is named as the ‘Advisory jurisdiction’ of the Court. With its proclamation, the supreme commander of the defence forces will have a choice to seek advice from the supreme court over a legitimate question of law or matter of public importance. Notwithstanding to the factum, it is in no needs and deeds absolutely binding over the highest legal authority to answer all of the questions. The reasons of rejection would be acknowledged if they stand in the fire line of political or socio-economic in nature.

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HIGH COURTS ACROSS THE STATES

The union of republic of India comprises of 24 major High Courts at the states and UT’s level, each and every high court encompasses jurisdiction over a specific UT, one single state, or more than a single state or UT. Subsequent to the supreme court, the high courts are also the courts of record which enshrines them the power to punish for the contempt made to them. The very first high court of republic of India was the Calcutta High Court.

The High Courts of Calcutta, Bombay and Madras possess an original jurisdiction over the civil and criminal cases arising across their territorial jurisdiction. The Hon’ble High Courts enjoy the treat of power to hear civil cases concerning property worth over Rs.20000. Petitions on elections are also entitled to be heard in the High Courts. They are empowered to issue writs [habeas corpus, mandamus, prohibition, quo warranto and certiorari for enforcement of fundamental and other rights] under the Article 226 of the Constitution of India [1] and the matters of these writs unlike of the supreme court can even go beyond the umbrella of just fundamental rights; making its scope of authority wider than that of the Hon’ble apex court of the country.

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If any individual finds the decision delivered by the respectful lower courts unsatisfactory, the concerned individual under the Appellate Jurisdiction of the High Court can make his submissions again with a proper procedure inscribed by law. An appeal can also be made from the subordinate court directly if the dispute involves a value higher than Rs. 5000/- or on a question of fact or law. They even possess a power of judicial review, the said provides the court of record to declare any law or ordinance null and void i.e., unconstitutional.

LOWER JUDICIAL BODIES

Underneath the functioning of high courts and the supreme court, in order to dispense justice at the very lower or district level, certain lower judicial bodies are incorporated. These lower judicial bodies are popularly known as the lower courts and comprise of; district and sub-ordinate courts. Each specific state is divided into some judicial districts whose authority is on the shoulders of the ‘District and Sessions Judge’. They are titled as District Judge in the civil related matter and in the criminal cases, the judges are termed as a Sessions Judge.

A District Judge is also known to be as a ‘Metropolitan Sessions Judge’ when the concerned holds a chair of a district court prevailing its jurisdiction in a metropolitan area. District judges may even dispense their authorities with Additional District judges, depending upon the judicial workload over the respectful court. Hon’ble District Judge is the highest judicial authority after the Hon’ble justice of a High Court. In some special cases, the presence of lower judicial authorities which are even lower than that of a District Court and the same are called as, Munsif’s Courts and Small Causes Courts. The aforesaid courts only have an original jurisdiction and can hear suits concerning only small amount matters therefore, they possess a very less pecuniary jurisdiction.

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An additional district or a district court in the civil and criminal matters of its own district empowers and practices jurisdiction on both the sides, be it original or appellate. In the civil cases, the pecuniary and the territorial jurisdiction of these courts are totally and absolutely regulated by the concerned state enactments. In the case if criminal matters, the exclusive jurisdiction comes from the CrPC[1].

The district court comprises an appellate jurisdiction over all the lower courts within its own jurisdiction. Few special specific matters of the civil or criminal cases cannot be submitted in a court whose jurisdiction is lower than that of a district i.e., District Court.  An individual if left unsatisfactory can approach the Hon’ble high court under the umbrella of the appellant jurisdiction.

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[1] Code Crim. Proc.

[1] India Const. art. 226.

[1] India Const. art. 131.

[2] India Const. art. 32.

[3] India Const. art. 136.

[4] India Const. art. 143.

Categories
Online legal courses

E-Commerce Contracts and the clauses covered under it

By: Alok Rao

Introduction: –
E-commerce is a form of business model, or segments of a larger business model, enabling a company or person to conduct business on an electronic network, typically the Internet. However, there is no specific meaning of the term e-commerce, which is usually used to denote a form of doing business by electronic means rather than by conventional physical means. E-commerce questioned companies’ traditional system trading with customers, putting together diverse business models that empowered consumers.

The most popular business models facilitated by e-commerce are:

  1. B2B: Business to Business (B2B) explains trade transactions between different companies, allowing foreign companies to develop new partnerships with other companies. As between the manufacturer and the wholesaler, or between the wholesaler and the retailer.
  2. B2C: Business to Consumer (B2C) defines companies’ operations providing end customers with goods and/or services. There has always been a direct interaction between companies and customers, but with e-commerce, the traction has been gained in such transactions.
  3. C2C: Business to Consumer (C2C) includes electronically facilitated transactions between consumers through third parties. Traditionally, customers have had interactions with other consumers, but only a handful of these practises have been of a commercial sort.
  4. C2B: Customer to Business (C2B) involves customers supplying goods/services to businesses and generating value for the company.
  5. B2B2C: This is an alternative to the B2C model, and there is an external intermediary sector in this form of the model to assist the first business transaction with the end customer. For example, Flipkart is one of the popular e-commerce portals and offers a stage for customers to buy a wide variety of items, such as books, music, CDs, etc.

As a result, the e-commerce world may appear uncomplicated and economical; there are several legal considerations that an e-commerce company must seriously consider and bear in mind before beginning and while carrying out its operations.

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E-commerce law in India: –

Information Technology Act, 2000
The first ever e-commerce legislation passed by India’s Government was the Information Technology (IT) Act 2000. It was an act to give effect to the UNCITRAL Model Law on Electronic Commerce, 1996. On 30 January 1997, the General Assembly of the United Nations adopted a resolution commending the Model Law on Electronic Commerce for favourable consideration by the Member States as a Model Law as they pass or amend their rules, given the need for uniformity of the law applicable to alternatives to paper-based methods of communication and storage of information.

The IT Act’s primary purpose was to include legal recognition of transactions carried out through electronic data exchange and other electronic means of communication, generally referred to as electronic commerce (e-commerce). The IT Act 2000 facilitates e-commerce and e-government in the region. It includes guidelines on the legal recognition of electronic records and digital signatures rules for the allocation of e-records, the process and manner of reception, the time and place of dispatch and the receipt of electronic documents. The Act also sets out a legal system which sets out penalties for various cyber offences and crimes. Significantly, under the Act, the Certification Authority is the focal point around which this Act revolves, as most of the provisions relate to the Regulation of Certification Authorities, i.e., the appointment of a CA Controller, the licensing of CAs and the recognition of international CAs. It has also punished crimes such as hacking, damage to the source code of the machine, publication of information that is obscene in electronic form, violation of confidentiality and privacy, and fraudulent granting and use of digital signatures. It also provides civil liability, i.e., cyber contraventions and criminal infringements, fines, the establishment of the Adjudicating Authority and the Cyber Regulatory Appeal Tribunals.

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The relevant provisions of the Indian Panel Code, 1860, the Indian Evidence Act, 1872, the Banker’s Book Evidence Act, 1891 and the Reserve Bank of India Act, 1934 were also amended to resolve the related issues.

Information Technology (Amendment) Act, 2008
India incorporated the Information Technology (Amendment) Act, 2008 to apply the UNCITRAL Model Law on Electronic Signatures, 2001 in India. The IT Act of 2000 was modified to make it technologically neutral and accepted electronic signatures over-restrictive digital signatures. The Act incorporated several amendments, such as implementing the principle of e-signature, the modification of the definition of intermediary, etc. Also, the State asserted unique powers to monitor websites in order, on the one hand, to protect the privacy and, on the other hand, to control potential misuse leading to tax evasion. It is important to note that this Act acknowledged the legal validity and enforceability of digital signatures and electronic records for the first time in India and concentrated on protected digital signatures and secure electronic documents. These reforms were implemented to reduce the occurrence of electronic forgeries and promote e-commerce transactions.

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Legal Validity of Electronic Transactions in India: –
There are numerous legal concerns related to the formation and legality of electronic transactions, such as online contracts and compliance issues, which are dealt with below.
Formation of an E-Contract
The most popular types of e-contracts are clickwrap, search wrap and shrink wrap contracts. The terms and conditions of such agreements shall be made available to the contracting party in a manner which is substantially different from the standard paper contracts. By clicking on the wrap contract, the party’s affirmative approval is made by checking the ‘I agree’ tab with a scroll box that allows the acceptance party to access the terms and conditions.
In the case of a browser wrap arrangement, the website’s mere use (or browsing) makes the terms binding on the contracting party.
In a Shrink-wrap agreement, the contracting party can read the terms and conditions only after opening the box inside which the product (usually a licence) is packed. Such contracts are important in the context of e-commerce, primarily because of the form of products associated with shrink-wrap agreements.

Online Contract Validity
The Indian Contract Act, 1872, regulates all e-contracts in India, inter alia, mandate specific pre-requisites for a valid contract, such as free consent and legal consideration. The concern to be considered is how the Indian Contract Act’s specifications can be met with e-contracts. Also, the Information Technology Act, 2000 (‘IT Act’) enhances the legitimacy of e-contracts.
According to the Indian Contract Act, 1872, some of the essential specifications of a legal contract are as follows:

  • The agreement should be entered into with the free consent of the parties.
  • The agreement should be considered lawfully.
  • The parties should have the authority to enter into contracts.
  • The purpose of the contract is to be lawful.
  • Terms and conditions associated with the e-commerce platform are of the utmost importance in ensuring that the e-commerce agreement meets a legal contract’s specifications.

Unless expressly forbidden, clickwrap agreements would be enforceable and legal if the provisions of a valid contract set out in the Indian Contract Act of 1872 were met.

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There is no provision under the Indian Contract Act that written contracts be physically signed. However, the unique statuses do include the criteria for signature. Furthermore, the very essence of e-commerce is that it is virtually impossible to verify the age of someone who is trading online and who presents problems and liabilities to e-commerce platforms because the situation under Indian law is that a minor is not qualified to enter into a contract and that such an agreement is not enforceable against a minor.
In India, any instrument under which rights are produced or transferred must be stamped. The stamping of the instrument also depends on relevant stamp duty legislation passed by different states in India.

Standard Type of Online Contracts is not appropriate.
There is no well-developed case law in India as to whether the traditional type of online agreements is unwise. However, Indian courts have previously dealt with cases where contract terms, including common form contracts, have been negotiated between parties in unequal negotiating positions. Specific provisions of the Contract Act deal with unenforceable agreements, such as when public policy is opposed to considering the contract or subject-matter of the contract. The agreement itself cannot be valid in such situations.
The courts may place the individual’s responsibility in the leading position to show that the contract was not caused by undue influence.
In the case of ‘LIC India Vs. Consumer Education & Research Centre’
L.I.C. Of India & Anr vs Consumer Education & Research Centre & Ors. Etc. 1995 SCC (5) 482, the Hon’ble Apex Court of India interpreted the insurance policy issued by India’s Life Insurance Corporation by adding certain public interest elements. The court observed that ” in dotted line contracts there would be no occasion for the weaker party to bargain as to assume to have equal bargaining power. He has either to accept or leave the service or goods in terms of the dotted line contract. His option would be either to accept the unreasonable or unfair terms or forgo the service forever.”

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It is essential to provide well-thought-out terms that shape online contracts to ensure that there is an ample opportunity for consumers to familiarise themselves with the terms of such agreements. In addition to the above, there is also a range of other legal, tax and regulatory concerns, in particular Security Issues, Consumer Protection Issues, Intellectual Property Issues, Content Control, Intermediate Liability, Jurisdictional Issues and Tax Issues, which need to be taken into account when dealing with e-commerce transactions.

Conclusion: –
Rapid growth in e-commerce has generated the need for vibrant and efficient regulatory frameworks to reinforce the legal framework crucial to the success of e-commerce in India. It has always been argued that poor cybersecurity laws in India and the lack of a proper regulatory system for e-commerce are why both Indians and the e-commerce industry face so many challenges in enjoying a consumer-friendly and business-friendly e-commerce climate in India. India does not have any dedicated e-commerce regulatory legislation other than the IT Act that governs India’s e-commerce and transactions. Therefore, the government should create a legal structure for e-commerce so that domestic and foreign trade in India will flourish so that fundamental rights such as privacy, intellectual property, the prevention of fraud, consumer protection, and so on are taken care of. The legal community in India needs the required expertise to direct entrepreneurs, customers, and even courts. The rapidly evolving market module can comply with existing legislation usually applicable to business transactions in standard modules. Simultaneously, it should ensure that the benefits of technology are unhindered by the judicious evolution of law by the learned interpretation of the court, and there is still a consensus that specialized law governing and controlling some aspects of e-commerce is an obligation and an exclusive requirement.

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Are the existing Maritime Laws in India sufficient enough to safeguard Maritime Security?

By: Kunjan Makwana

Introduction

India can be deemed to be regarded as a maritime state which has a long coastline that is 7500 kilometres long. Since India is a maritime nation, it has 274 islands that are surrounding the Indian territory in close consonance to the Bay of Bengal and the Arabian Sea, which can also be deemed to be regarded as the top most point of the Indian Ocean. The Indian subcontinent is spread across a massive area comprising 1000 kilometres venturing into the northern part of the Indian Ocean in the form of a wedge and this part can be said to have two distinct subregions.

Mr. K.M. Panikkar once opined that, “It is the geographical position of India that brings about the multitude of changes in the character of the Indian Ocean.”[1]  It is highly imperative to understand that the Indian Ocean plays a very significant role when it comes to the sovereignty of India and it is worthy to note that whenever India has neglected the Indian Ocean, it has had a tough time dealing with its sovereignty and this was quite evident even during the time when the European Powers had a standing in India. The Indian Ocean can be deemed to be regarded as a crucial water body for India as it has enabled India to carry out foreign trade activities and there exists innumerable evidence to support the fact that India has majorly relied upon the Indian Ocean when it came to trading and these evidences can be traced way back to the 9th Century BCE.[2]  In fact, Maritime Trade still plays a significant role in contributing to the economy of India despite there being innumerable geographical shifts when it comes to dealing with India’s patterns of trading with other countries via the sea route. However, it is quite pertinent to consider that a huge number of these commodities that India imports, enter the Indian Territory via sea route and therefore it is quite pertinent for India to take extreme measures when it comes to developing its maritime security as in the coming years it is ought to play a very prominent role which would enable India to develop itself globally. It can be said that the maritime laws in India are their nascent stage and the legislation needs to work towards making maritime laws in India much more comprehensive and robust.

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It is imperative to note that the Government is taking initiatives when it comes to developing the maritime regime in India. Certain initiatives by the Prime Minister, like the Prime Minister’s vision with regards to the Security and the Growth for All in the Region (SAGAR) along with a clear emphasis on the advancements made in maritime infrastructure is something which has received tremendous accolades and these initiatives have thoroughly enabled India to achieve greater milestones when it comes to developing its Maritime infrastructure which needs to be focused upon if India wishes to emerge as an all-round winner in its immediate neighbourhood. India needs to primarily focus on the issues and security concerns that are hovering in the Indian Ocean region, (hereinafter referred to as, “IOR”). It should be India’s primary concern to focus upon its maritime security framework because the current pieces of legislation governing the Maritime Laws regime in India are sadly not robust enough. India needs to bolster its resources when it comes to developing its maritime security in the IOR.

India’s Maritime Interest

In order to understand India’s maritime interests, it is imperative to primarily understand whether the maritime security in India is in place or not. First, it is quite necessary to understand what is meant by maritime interests. Maritime Interests can be deemed to be regarded as those interests which take under its ambit crucial aspects pertaining to a country’s ability to claim its maritime realm, which is extremely imperative when it comes to a country’s survival and development. It is highly recommended that a country takes measures and fosters its resources in order to preserve these interests as these interests could be deemed to be regarded as key interests of a country and they play a major role in securing the national security of any country. India, primarily undertakes its business activities via the sea route and therefore it is extremely necessary for a country like India to closely delve into making military and nationalistic strategies when it comes to its maritime interests.

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Maritime Territory

India is deemed to have a large coastline which extends to 7517 Kilometres and takes under its umbrella, 1200 islands. A lot of these islands can be said to be extremely distant from the main coastline of India, for instance, the Andaman & Nicobar Islands can be deemed to be regarded as those islands which are approximately 1600 Kilometres away from the closest coastline of India. India’s territorial sea occupies approximately 1,93,834 square kilometres and the Exclusive Economic Zone (hereinafter referred to as, “EEZ”) takes under its scope approximately 2.02 million square kilometres (sqkm). The living and the non-living resources that reside in this zone, amount to two-thirds of the landmass that India occupies and these resources, whether living or nonliving, exclusively fall under the ownership of India and they can be deemed to be regarded as a part of India, which also enables India to carry out its transportation activities and this has clearly opened innumerable opportunities for India to carry out its trade activities through this area. This part can also be deemed to be regarded as a part which is home to 51% of India’s oil resources and 66% of natural gas reserves. It is imperative to note that the protection and preservation of these natural resources not only deals with the territorial integrity of the nation but also takes into consideration the safety, which is a highly important factor. These routes act as a safety border which enables India to maintain its territorial integrity and at the same time secures India from potential external threats.

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Sea Lines of Communication (SLOCs)

It is quite imperative to understand the need for Sea Lines as they can be gauged from the fact that the oceans supported about four fifths of the total world merchandise trade pertaining to the year 2014.[3] In a period spanning 10 years, India has diversified itself and has stepped foot in sea trade and its trading activities have multiplied at a constant rate of 3.3 percent. India’s maritime container trading figures have also significantly risen and there has been a steady growth of 6.5 percent which can be deemed to be regarded as a significant growth when compared to the world average of 5.4 percent over the period spanning ten years. On the other hand, the cargo traffic at the ports in India has also seen a massive bull run and it has touched a milestone of 1 billion tonnes per year as compared to the last decade (Financial Year 2005-2015) and it can surely reach the 1.7 billion tonnes per year mark in the next two years, i.e. by the year 2022.[4] These numbers depict that over 95 percent of India’s trading activities lie in the SLOCs and International waters play a major role when it comes to India excelling in the field of trade and commerce via sea routes. The International Shipping Lanes of the Indian Ocean which is used by India requires dire attention and the security needs to be worked upon in order for India to sufficiently continue its trading activities overseas.

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Maritime Economy

Needless to say, the Indian economy is majorly dependent on the energy imports that it has indulged into. Apart from this, the Indian economy also relies on the total domestic oil consumption and it imports oil from other countries and these import activities are eased since India has the Indian Ocean passage when it comes to importing oil. These import activities are undertaken by vessels which travel by the sea and offshore oil gas production can be said to be accounting for almost 80 percent of all domestic gas that is produced. Approximately, 95 percent of the trade that India undertakes internationally by volume and over 70 percent of its value is carried over by the sea routes.[5] India can also be deemed to be regarded as the world’s fourth largest producer of fish and majority of these fishes are imported and come from the sea.[6] The maritime economy of India includes a prominent network of 13 major and approximately 200 minor ports all along the coast. It is imperative at this conjecture to throw light upon the Sagarmala project which has delved into the development of a port and has also significantly contributed towards the quick and efficient transportation of goods and services to and from the ports. It is therefore quite imperative for the Government to build this nascent maritime economy and take initiatives in order to ensure that it is free from impediments and potential external threats.

Maritime Investments

India has contributed in a number of industries such as the infrastructure, energy and services industry in a lot of countries which can be deemed to be regarded as its immediate maritime neighbours. India has also established a research station in Antarctica which enables India to carry out research activities in a wide variety of areas, however, India has majorly worked towards the development of the technology which would enable India to deal with the global climate change issues. India has shown tremendous potential when it comes to venturing into deep sea mining activities and is working in close consonance with the International Seabed Authority, which has accorded it a pioneer status and at the same time has provided 75000 square kilometres of seabed area in the Central part of the Indian Ocean. ONGC Videsh Ltd has ventured into oil exploration activities and has set up its oil exploration plant in the Exclusive Economic Zone (EEZ) of Vietnam. ONGC Videsh Ltd is carrying out these activities within the two blocks which the Vietnamese Government has allocated to it and because of this the Chinese Government is causing disruptions and China has made claims alleging that the activities carried out by ONGC Videsh Ltd along with the Vietnamese Government are illegal and are jeopardising the status of the already in dispute South China Sea. However, India is still in its nascent stages and is taking innumerable efforts when it comes to developing its economy in the maritime sector, however, it is important for India to ensure that it is secure from external threats which could severely jeopardise the inimical interests.

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India’s Maritime Security Concerns

India’s maritime security has been a crucial issue and these issues arise from the threats, which have majorly occurred in the interest of the Indian Ocean and this is in direct consonance to India’s varied maritime interests. It is crucial to understand that a number of these potential maritime threats which are lurking over India have a direct influence on the other stakeholders in the Indian region and this may have a significant impact on India, since India is, “already assuming her responsibilities when it comes to securing the Indian Ocean region.[7]  India faces immense potential threats from its neighbours and these potential threats could seriously harm the national interests of the country during times of war and hostilities which are never taken into consideration since they fall under the scope and the ambit of war fighting, however, what is important at this conjecture is to ensure that the legislature gets out of its lethargy and establishes a robust and comprehensive piece of legislation which governs the maritime activities. There lurks a constant threat to the SLOCs as the SLOCs in the IOR are extremely susceptible to being disrupted by a wide variety of traditional and non-traditional threats over the years. However, India has constantly depended upon the seas when it comes to carrying out trading activities and these threats which are constantly lurking over the SLOCs in the IOR could be resolved if a comprehensive legislation is enacted and put in force. The Legislature needs to enact a law which may act as a shield over all the nefarious activities that could be deemed to be regarded as a potential harm to the maritime security of India. For instance, Piracy, Regional Instability, Trafficking of Goods and Humans, Terrorism, et. Cetera could all be controlled if a proper and a comprehensive law is enacted by the legislature. There have even been instances of illegal unreported and unregulated fishing, which has proven to be a severe issue for the marine communities around the globe and the governments of a number of coastal states are constantly endeavouring towards enforcing international and national maritime laws which are robust and control these aforementioned activities.

Regional Security Architecture in the IOR

India has always been cooperative and has taken a very positive approach when it comes to bolstering maritime security in the IOR. This is evident from PM Narendra Modi’s aim of SAGAR, also known as the Security And Growth for All in the Region.[8] The IOR has innumerable arrangements in this particular area and this area can be said to be restricted for other countries. India has taken innumerable efforts and has developed the IORA which is the Indian Ocean Rim Association, which was launched in the year 1997 and its goal is to promote the growth of intra-regional economy. However, maritime security and safety has not been given much emphasis, but the Indian Ocean Naval Symposium is another initiative which was founded in the year 2008 and it works in the direction of improving the maritime co-operation between the navies of various littoral states surrounding the Indian Ocean Region. However, again this is an initiative by the Navy and there is a clear absence of the government’s participation.

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In a nutshell, a comprehensive and an overarching security framework for the Indian Ocean Region is extremely crucial for the government to develop considering the current geopolitical status and the developmental activities being carried out by the various littoral states. The Legislature needs to emphasize on how important it is for India to have a responsibility of regional states when it comes to maintaining peace, stability and prosperity in the Indian ocean. India needs to make a concerted effort in the form of a robust piece of legislation if it aims to mitigate the innumerable threats lurking over it.

[1] KM Panikkar, “India and the Indian Ocean: An Essay on the Influence of Sea Power on Indian History.”

[2] “The Periplus of the Erythraean Sea”, Longmans Green & Co, 1912.

[3] UNCTAD Review of Maritime Transport 2015, Page 5.

[4] Facts & Figures, Maritime India Summit 2016.

[5] Facts & Figures, Maritime India Summit 2016.

[6] FAO yearbook 2012, Page 9.

[7] ICC IMB Piracy and Armed Robbery against Ships, 01st January-31st December, 2015.

[8] PM Modi’s Speech Commissioning of Mauritius CG Ship Barracuda, 12th March, 2015.

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Contracts in the Sports Industry and the Clauses Covered Under it

By: Tanisha Yadav

INTRODUCTION:

Sport is that social phenomenon that has existed from a very long time in all levels of society. It represents the country’s culture and affects people’s lifestyle, health, values, social status, country’s relation, fashion trends, etc.

It is a type of game or contest where people get involved and perform physical activities to compete against each other following definite rules and regulations. Cricket, football, basketball, and volleyball are played by the number of people in different parts of the world.

The sport has now taken the industry’s shape from the last few decades to which we often called the Sports industry. It is a market with an economic dimension, which offers products, services, places and ideas related to sport, fitness or leisure time to its consumers[1] which also involves people, organizations and businesses who facilitate, promote, and organize activities and events based on sports.

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Contract in the Sports Industry:

Sports Contracts are similar to those contracts we come across in our everyday life; they are the mutual agreements that legally bind two or more parties.

Generally speaking, the sports industry’s Contract occurs between the sports organization/sports Agent and player/Athlete.

It defines the rights and responsibilities of the various participants in the business of professional sports.[2]

All the sports contracts are express in which parties give their consensus by words either spoken or written to enter into the Contract by way of offer, acceptance and consideration in Contract. Virtually, in sports contracts, implied contracts are not considered as a real contract as its very hard to prove the implied Sports contract.

Apart from offer, acceptance and consideration, an athlete’s capacity, mutual agreement, mutual obligation and subject matter are the essential ingredients in forming the sports contract. If the athlete is an adult, he can sign the contract, but his legal guardian must sign the Contract if the athlete is minor.

In India, Sports Contracts are governed by The Indian Contract Act, 1872, and The Industrial Disputes Act of 1947.

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Following are the considerable areas/ subject matter in which sports contracts takes place[3]:

  • Endorsement and merchandising Contract
  • Contract of Sponsorship Rights
  • Contracts between Player and managers or Agency contracts.
  • Deal of Membership rights in sporting clubs or organizations.
  • Contract of Image rights
  • The contract for appearances by players
  • Contract of Participation Rights and Obligations.
  • Presenter’s Contract
  • Contract of sale of media rights with event managers, Broadcasters and promoters.
  • Endorsement and merchandising Contract
  • Contract of Player transfer
  • Contract of Brand rights.

Player-Agent Relationship:

The player-Agent relationship is significant in sports contracts, as the player is sometimes so occupied in his sports that he doesn’t get time to negotiate Contract and handle everything. Sometimes the player faces difficulty in understanding terms of the contracts too. In that scenario, the player needs a person to trust, who can look and manage a player’s commercial relationships.

Player: Player is a person who actively participates in any sports requires endurance.

Agent: A agent is a person who carries a fiduciary relationship with the player in which he serves a significant role in negotiating contracts of the professional player and handles finances and public relations.

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TYPES OF SPORTS CONTRACT:

Professional Service Contracts: These contracts are also known as standard player’s contracts. These contracts are usually in a “boilerplate” form. The boilerplate form is the standardized forms in which standard or generic language is used.

These boilerplate forms are used where a state of Contract that can be reused in a new context without having any substantial changes in it.[4] Thus, the wording of these contracts can be used again and again without any alteration or reformation. If a professional athlete is part of a team, usually the athlete receives a standard player’s contract.[5] Hence, the professional service contracts are the same for all the athletes except the differences in salary and athletes’ bonus and involve an employer-employee relationship. Furthermore, these contracts also leave the scope of modification that can be modified by introducing collateral agreements.

Endorsement Contracts: Endorsement contracts are the independent contracts which do not require employer-employee relationship. An endorsement contract is one that grants the sponsor the right to use (i.e., license) the athlete’s name, image, or likeness in connection with advertising the sponsor’s products or services.[6]

Appearance Contracts: The appearance contracts are those contracts which pay the player/athlete for his/her appearance in any public event of any organization, institute or company by way of Contract. Thus, it is a contract between the venue and the athlete. It includes Sports camp, sports tournament etc. It sets out the time and dates for the appearance of an athlete on the venue location.

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Besides, if under any of the kind of contract, the contracting party extends beyond the scope of the terms of the Contract, under section 27 of the Indian Contract Act, 1872, i.e., restraint of trade, it would be void and not enforceable.[7]

CLAUSES COVERED UNDER THE CONTRACT:

Title: Its always essential that there should be a title of the Contract, through which one can identify the very nature of the Contract.

Information Clause: Under this clause, the information of the contracting parties is mentioned. Such as the name and address of the parties to the Contract. It also includes the information that on which date the Contract was made.

Player services Clause[8]: What type of service provided by the player is being discussed under this clause.

Player obligations Clause: This clause contains the obligations of contracting parties towards each other. It elucidates the rights, duties and responsibilities of the parties.

Term clause: This clause specifies the Contract’s duration—the time of Contract from the beginning to the end date. After completing the due date, the Contract automatically terminates, although it is subject to the renewal option of Contract to the parties.

Revenue-sharing Clause: If any organization or a company is hiring the player on the promise of sharing revenue, this clause discloses the information about the percentage and related details shared between the parties to the Contract.

Bonus Clause: This clause states that the player would get a bonus amount on his/her exceptional performance in sport.

Arbitration Clause: This clause expounds that if any dispute, controversy or any claim arises or if the issue related to breach of contract, non-performance or interpretation of Contract occurs then in that case, the matter will be resolved by the arbitrator on request of any of the parties. If parties do not agree on an arbitrator in any case, then in that scenario, both the parties will select one arbitrator. Then both the arbitrators shall select a third, and then the third arbitrator shall arbitrate the dispute.

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Board, lodging, and travel expenses Clause: 

This clause deals with the board, lodging and travel expenses of the player. It states that all the costs mentioned above will be borne by the club or organization hiring the player.

Choice of Forum Clause: Under this clause, the choice of law is mentioned through which contracting parties would like to govern, construe and enforce the Contract. As most of the sports contracts affect the parties belongs to different states, choosing a common law or jurisdiction can save parties from any further jurisdictional issues.

Remuneration and other benefits Clause: This clause states the player’s remuneration for his services.

No-Tempering Clause:  A no-tampering clause which avers that one player cannot attempt to entice another employee to enter negotiations with another club while under Contract to a different team.[9]

Confidentiality clause: Most contracts come with the confidentiality clause; certain things need to be confidential between the contracting parties only. Therefore, under this clause, contracting parties agree to keep the Contract’s contents and related matter confidential. This clause binds the parties to the Contract even after the termination of the Contract.

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Player restrictions/Hazardous Activities Clause: Under this clause, the player agrees that during the duration of the Contract the player will not engage in any other sport or any activity which can involve the substantial risk of any personal injury or which can impair the skill of the player in his sport. Apart from that, this clause contains other restriction on the player by the organization or club for the effective enforcement of the Contract. If the player breaches any of the rules and regulation mentioned under the clause or if the player becomes injured as a direct result in taking part in the given activity, the team/organization can transfer the financial risk onto the player.[10]

Non-assignment Clause: Sports contracts are personal services contract, and therefore it cannot be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.[11]

Termination Clause: A termination clause gives the right to the contracting parties to terminate the sports contract. Commonly, it is based on the failure of the parties’ performance, breach of any material condition, warranties, or the express agreement. Furthermore, in most cases, the contract is terminated because the player is no longer fit for the sport or cannot meet the team’s need.

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Usually, the party seeking to terminate the agreement must give the other advance written notice of his intention to terminate the Contract. As long as the party seeking to terminate the Contract complies with the notice provisions, termination of the Contract is permissible.[12]

Remedies Clause: A breach of Contract can be remedied through monetary damages, restitution or specific performance. Although, the parties seek for the remedial measures which were promised under the clause.

These were the few clauses present in almost every sports contract; there are some other clauses whose inclusion mainly depends on the nature of the sports contract.

CONCLUSION:

In India, the sports industry is at its boom. There are so many sports contracts that are signed every day in this industry. It is quintessential that the contract drafter should take exceptional care while drafting the policies, procedure and clauses under the Contract. Because it prevents the parties from any predicament.

But, it’s so sad that due to lack of proper sports law, Indian sports industry witnesses scandals and unfair dismissal of players. Today, there is a dire need for the introduction of sports legislation. Because it’s the only ray which can address this situation and bring fairness in this industry. Thus, for the Indian sports industry’s consistent growth, a healthy balance in the enforcement of Contract is required.

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[1] IGI Global, What is Sports Industry, IGI Global, https://www.igi-global.com/dictionary/concurrence-of-sports-and-entertainment-industries/43855 (last visited on Jul., 17, 2020).

[2] Avinandan Chattopadhyay, Regulation and Liabilities of Parties in Sports Contract, Social Science Research Network, file:///C:/Users/HP/Downloads/SSRN-id2145520.pdf (last visited on Jul., 17, 2020).

[3] Farleys: Solicitors LLP, Sports Contracts and Agreements, Farleys, https://www.farleys.com/solicitors-for-you/sports-law-for-individuals/sports-contracts-and-agreements/ (last visited on Jul., 19, 2020).

[4] James Chen, Boilerplate, Investopedia (Sep., 03, 2019), https://www.investopedia.com/terms/b/boilerplate.asp.

[5] US Legal, Sports Contracts – Basic Principles, US Legal, https://sportslaw.uslegal.com/sports-agents-and-contracts/sports-contracts-basic-principles/ (last visited on Jul., 19, 2020).

[6] Supra note 6.

[7] Supra note 3.

[8] Anirudh Rastogi and Vishak Ranjit, E-Sports Player Contracts: Common Clauses And Potential Legal Issues In India, Ikigai Law: Mondaq (Jun., 18, 2020), https://www.mondaq.com/india/gaming/955392/e-sports-player-contracts-common-clauses-and-potential-legal-issues-in-india.

[9] Supra note 2.

[10] Adam Epstein & Josh Benjamin, Unique Clauses in Sport Contracts, Sh10an: WordPress, https://sh10an.wordpress.com/2015/04/11/unique-clauses-in-sport-contracts/ (last visited on Jul., 19, 2020).

[11] US Legal, Drafting Suggestions for A Sports Contract, US Legal, https://sportslaw.uslegal.com/sports-agents-and-contracts/drafting-suggestions-for-a-sports-contract/ (last visited on Jul., 20, 2020).

[12] Roshan Gopalakrishna & Vidya Narayanaswamy, Sponsorship Contracts – Reasonableness of Contractual Restraints, The Sports Law and Policy Centre (Feb., 10, 2011), https://sportslaw.in/home/2011/02/10/sponsorship-contracts-reasonableness-of-contractual-restraints/.

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Competition Law Issues in the Fashion Industry

By: Cheshta Tater 

When one thinks of the fashion industry, the first words which come into one’s head are “designer wear” and “exclusivity”. A small consumer share but a considerable revenue and profit share of the fashion industry comprises luxury fashion.[1] Luxury fashion thrives on exclusivity and brand value and is always a status symbol, never a need. Given its exclusive and expensive nature, one cannot help but wonder how it rarely ever comes under the lens of the Competition Commission of India (“CCI”) or any other anti-trust regulatory body.

The objective of competition law is to create a healthy market environment by protecting and balancing the interests of businesses, consumers, and the economy. Lower but competitive prices allow consumers to make informed decisions about the substitutive products they wish to purchase while ensuring that no business abuses its dominant position. However, in the luxury sector of the fashion industry, the prices of products are always sky-rocketing. The much affordable products can not substitute them since the cost of a product, and its brand carries high social standing value, and are often one of a kind.

In the past few years, there have been several mergers and acquisitions in the luxury fashion sector worldwide, leading to a few dominant players. However, none of them has come under the beat for violating provisions of competition law. Through this article, the author would elaborate upon regulatory authorities’ findings regarding the monopolies present in the luxury sector. After that, the intersection of Intellectual Property Rights (“IPR”) and Competition Laws concerning the fashion industry. Lastly, the author would present their views on the necessity to check on the dominant players in the luxury and high fashion sectors.

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  1. Escaping the Watchdogs

The 1990s saw the boom of luxury fashion houses as well as fast fashion houses across the globe. With India’s globalisation in 1991, these brands became household names for the affluent and aspirational products for the middle class. One such brand was “Louis Vuitton”, the first label of the world’s largest luxury fashion group, LVMH.[2]

Since 1987, LVMH has acquired many luxury labels, both within and outside the fashion sector. Today, the group owns 75 luxury houses[3] in the industry of, inter alia, clothing, cosmetics, bags, watches, wines and spirits, and perfumes. In 2000, the joint acquisition of the fashion house Prada by LVMH and Fendi was approved.[4] The European Commission allowed for such a merger since these companies’ market share did not exceed the 25% limit.[5] Even though the 25% mark was crossed in the luxury handbags sector and leather accessories, the Commission chose to look at the luxury sector as a whole rather than dividing it into segments such as luxury clothing, luxury handbags, and luxury wines, and the likes.[6] The Commission believed that despite the merger, the parties would not be a dominant player in the market,[7] and the same was reasoned by stating:

  • Luxury items have low to no substitutability with other similar but non-luxurious products[8]; and
  • The purchase of a luxury good is linked to prestige rather than consumption of a specific item,[9] indicating that one luxury label’s product can not be substituted by a similar effect of another luxury label.

The goodwill, brand name, and the trademark value of a luxury fashion group is the most significant factor in deciding the cost of its goods and its worth as a status symbol. The intersection of IPR and Competition law is discussed in the following segment. This will help understand the exorbitant prices and the Commission’s reasons behind allowing the joint acquisition.

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  1. The intersection of IPR and Competition Law

IPR refers to a bundle of rights which give the owner the right to exclude others from accessing the product, subject to a limited period, i.e., it aims towards providing a sort of monopoly to the owner of the said invention by giving them the sole right to use or distribute it. On the other hand, Competition Law strives for the exact opposite and actively works towards a non-monopolistic market. Hence, a tussle arises between the two–which while talking of similar subjects, are complementary to one another in nature in certain areas and balancing them is essential for having a near-perfect market.

The denotation of ‘competition’ in the IPR and Competition Law are contextually different. The primary objectives of granting IPR encourage fierce competition among the intending innovators and simultaneously restrict the competition in many ways. At the end of the specified duration, the rights go to the public domain ending the completion. The objective of Competition Law is to prevent abusive practices in the market, promote and sustain competition in markets and ensure that the consumers get the right products at a reasonable price and better quality.[10]

While competition in IPR is reward-based, it aims to regulate and eliminate the unfair advantages wielded by monopoly holders in Competition Law. Competition Law also does not recognise the concept of right, while IPR on the other hand, by way of competition, allows for exploitation of rights, albeit in a restricted manner. However, in both, the basic concept of competition is the main driving force of respective legislation. While it may seem that the objectives of both are poles apart, somewhere down the line, their ultimate goals are the same, i.e., to achieve consumer welfare.

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When it comes to luxury fashion, a dire need is seen to strike a balance between the two laws. While IPR is essential to luxury brands as more than anything, it is the brand’s uniqueness, which makes it a luxurious one. For example, it is the red sole of Christian Louboutin’s, which attribute them their high value. The principles of IPR must remain intact to promote innovation and cater to the public who may value uniqueness as an important factor while purchasing. For the same, evils such as Counterfeiting must be avoided and actively punished not to bring down the value of said luxury brands and in the background, the importance of innovation.

However, it is also crucial that these exclusive rights do not turn into Monopolies which in turn do not just turn exploitative to other producers, but are also unfair to the consumer as because of this exclusivity, not only can be charged exorbitant prices for said ‘unique products’, but also result in lesser variety for the consumer to choose from. And hence, the balance between Competition Law and IPR needs to be struck perfectly to neither take away from the Innovators and Owners, but also not hamper the consumer.

  • Bring them under the lens.

As discussed earlier, luxury brands are known for their exclusive goods and sometimes, even their exclusive customers. A luxury handbag label, Birkin, is so exclusive that bags aren’t available in retail stores and only a very few loyal customers are even offered to purchase a Birkin handbag.[11] This exclusivity of the brand and its reflection lies in the originality and sophistication of the product’s creation, the qualitative level of the materials used, and the products’ marketing.

Considering such exclusivity of the brand and its goods, presupposing luxury products’ interchangeability does not set a good precedent. For instance, no other label’s handbag is at par with a Birkin bag when it comes to exclusivity and status. As established earlier, luxury products are not purchased for their utility but their reputation. Even a product of the same fashion house cannot replace the more exclusive product at such a point. Taking the example of Birkin, a Birkin bag cannot be substituted by a bag of Hermès, which is the parent company of Birkin. Their cost indicates the same. While the cheapest Hermès bag sells for $540, the cheapest Birkin doesn’t trade for anything less than $12000.[12]

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Suppose the interchangeability of luxury products cannot be presumed. In that case, the entire luxury market cannot be created as a single competitive space, i.e., a more transparent and distinct division of products is necessary to correctly evaluate competitiveness and dominance in the luxury market. Wines and bags cannot be created in the same market. Once distinct relevant market needs are defined, it will be apparent that LVMH is a dominant player in two sectors: luxury handbags and luxury leather accessories.[13] The pertinent question in competition law now arises: Is this dominant position being abused?

In LVMH’s case, it is crucial to understand that the group owns 75 brands, many of which are “must-have” goods for retailers, i.e., an essential product that retailers have to stock and display to meet their customer’s requirements.[14] This leads to lower bargaining power in the hands of the retailer so that they have to stock more from the house, apart from the most-have. In turn, this leads to the absence or reduced presence of other dwellings in such a boutique because the retailer only has so much capital to invest.

Companies are free to enter the market in a competitive market to compete with existing players, without immediately devoured by more powerful rivals. It is becoming difficult for existing players to compete with LVMH; one can only imagine how new players will be slaughtered in the market. LVMH’s turnover of 53.7 billion euros in 2019 marked its dominance as the strongest player in the luxury market. Gucci, the second-largest luxury fashion house, has still not reached the 10 billion euro turnover landmark.[15]

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The numbers speak for themselves, indicating that the abuse of a dominant market position is not always active but is passive. If too much emphasis is placed on active abuse, there may be a risk that the market’s actual situation and concerns are overlooked.

[1] McKinsey and Company, The State of Fashion 2020 (2020) <https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/the%20state%20of%20fashion%202020%20navigating%20uncertainty/the-state-of-fashion-2020-final.ashx> 90-91

[2] Deloitte, Global Powers of Luxury Goods 2019: Bridging the Gap between the Old and the New (2019) <https://www2.deloitte.com/content/dam/Deloitte/ar/Documents/Consumer_and_Industrial_Products/Global-Powers-of-Luxury-Goods-abril-2019.pdf> 15, 42

[3] LVMH, Houses, <https://www.lvmh.com/houses/#:~:text=LVMH%20is%20home%20to%2075,exquisite%20caliber%20of%20its%20products.&text=Our%20group%20of%20wines%20and,no%20other%20in%20the%20world> last accessed 22 December 2020

[4] Commission approves joint acquisition of Fendi by LVMH and PRADA (European Commission, 26 May 2000) <https://ec.europa.eu/commission/presscorner/detail/en/IP_00_535> last accessed 22 December 2000

[5] Commission of the European Communities, LVMH / PRADA / Fendi (2000) COMP/M.1780 [16]

[6] ibid

[7] ibid [22]

[8] ibid [11]

[9] ibid [10]

[10] Shubhodip Chakraborty, Interplay Between Competition Law And IPR In Its Regulation Of Market (Lawctopus, 15 November 2015) <https://www.lawctopus.com/academike/interplay-competition-law-ipr-regulation-market/#:~:text=Intellectual%20Property%20Rights%20(IPR)%20consists,adverse%20effect%20on%20the%20market> last accessed on 23 December 2020

[11] Sarah Lindig, This Iconic Bag is Still the Most Exclusive in the World (Harper’s Bazaar, 14 June 2015) <https://www.harpersbazaar.com/fashion/trends/a11201/hermes-birkin-bag-most-exclusive-in-the-world/> last accessed 22 December 2020

[12] Hermès <https://www.hermes.com> last accessed 23 December 2020

[13] LVMH / PRADA / Fendi (n 6)

[14] Commission of the European Communities, Coca-Cola/Amalgamated Beverages GB (1997) IV/M.794 [136-138]

[15] George Arnet, Gucci on Track to Hit €10 Billion in 2020 (Vogue Business, 26 April 2019) <https://www.voguebusiness.com/companies/gucci-sales-reach-euro-10-billion> last accessed 24 December 2020

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