Mercantile Laws CBMBL3T02

Syllabus topics (RTMNU)

• Definition of Partnership
• Types of partners
• Rights and liabilities of partners
• Dissolution of a firm
• Consequences of non-registration of partnership firm
• Salient features of LLP
• Difference between LLP and partnership
• LLP and company
• LLP agreement
• Nature of LLP
• Partners and designated partners
• Incorporation by registration
• Change in name and registered office
• Partners and their relations
• Extent and limitation of liability of LLP and partners
• Basic taxation provisions of LLP
• Conversion of LLP to a company

Definition of Partnership

Definition (Section 4, Indian Partnership Act, 1932): Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who join are called partners and together they are called a firm.

Essential elements:

1. Two or more persons – maximum 50 (Companies (Miscellaneous) Rules, 2014).
2. Agreement – oral or written contract, not status.
3. Lawful business must be carried on.
4. Sharing of profits among partners.
5. Mutual agency – each partner is principal and agent; this is the real test of partnership.

Types of Partners

Rights and Liabilities of Partners

Rights (subject to the partnership deed):

1. Take part in business and be consulted (Sec 12).
2. Inspect and copy books of account.
3. Share profits equally if deed is silent (Sec 13(b)).
4. Interest on advances at 6% p.a.; interest on capital only if agreed.
5. Indemnity for payments made in proper conduct of business.

Liabilities / duties:

1. Be just, faithful and render true accounts (Sec 9).
2. Indemnify the firm for loss by fraud or wilful neglect.
3. Hand over personal profits earned from firm's business (Sec 16).
4. Unlimited, joint and several liability for acts of the firm (Sec 25).

Dissolution of a Firm

Dissolution of partnership means only a change in relation (e.g. a partner retires); dissolution of the firm means the relation between all partners ends and the business is closed (Sec 39).

1. By agreement (Sec 40).
2. Compulsory (Sec 41) – insolvency of all/all but one partner, or business becomes unlawful.
3. On contingencies (Sec 42) – expiry of term, completion of venture, death or insolvency of a partner.
4. By notice (Sec 43) – in partnership at will.
5. By Court (Sec 44) – unsound mind, permanent incapacity, misconduct, persistent breach, business only at loss, just and equitable ground.

Consequences of Non-registration of a Firm

Registration is not compulsory, but Section 69 creates disabilities for an unregistered firm:

1. The firm cannot file a suit against a third party to enforce a contract.
2. A partner cannot sue the firm or other partners to enforce rights arising from the contract or the Act.
3. The firm cannot claim a set-off of more than ₹100 in a suit against it.

Exceptions: suit for dissolution or accounts of a dissolved firm; claims up to ₹100; third parties can always sue the firm.

Salient Features and Nature of LLP

Limited Liability Partnership (LLP) is a body corporate formed and registered under the LLP Act, 2008, having a separate legal entity from its partners. It combines the flexibility of a partnership with the limited liability of a company.

1. Body corporate with separate legal entity (Sec 3).
2. Perpetual succession.
3. Limited liability of partners.
4. Minimum 2 partners, no maximum.
5. At least 2 designated partners, one resident in India.
6. Internal matters governed by the LLP agreement.
7. Annual filings: Statement of Account and Solvency (Form 8) and Annual Return (Form 11).

Difference between LLP, Partnership and Company

LLP Agreement

An LLP agreement is a written agreement between partners, or between the LLP and partners, deciding their mutual rights and duties (Sec 2(1)(o)). It is filed with the Registrar within 30 days of incorporation and covers capital, profit ratio, admission/retirement and powers of partners. If there is no agreement, the First Schedule of the Act applies.

Partners and Designated Partners

• Any individual or body corporate may be a partner (Sec 5); not a person of unsound mind or an undischarged insolvent.
• Every LLP needs at least two individual designated partners, one resident in India (Sec 7) – resident means stayed in India at least 120 days in the previous financial year (2021 amendment).
• They need a DPIN/DIN and are responsible for all legal compliance and filings.

Incorporation by Registration; Change in Name and Registered Office

1. Reserve name (RUN-LLP); it must end with 'LLP'.
2. File incorporation document (FiLLiP) signed by two or more persons (Sec 11).
3. Registrar issues Certificate of Incorporation with LLPIN (Sec 12).
4. File LLP agreement within 30 days.

Change in name (Sec 16–17): by notice to the Registrar; the Central Government can direct a change if the name is too similar to an existing one. Registered office (Sec 13): may be changed by filing notice with the Registrar within 30 days.

Partners and their Relations; Extent and Limitation of Liability

• Mutual rights are governed by the LLP agreement (Sec 23).
• Every partner is an agent of the LLP, not of other partners (Sec 26).
• The LLP is liable for wrongful acts of a partner done in the course of business (Sec 27).
• A partner is not personally liable for LLP's obligations, only for his own wrongful acts (Sec 28).
• In case of fraud, liability becomes unlimited (Sec 30).

Basic Taxation Provisions of LLP

1. Taxed like a partnership firm at 30% plus surcharge and cess.
2. Partners' share of profit is exempt (Sec 10(2A), Income-tax Act).
3. Interest on capital (up to 12% p.a.) and remuneration to working partners are deductible within limits (Sec 40(b)).
4. Alternate Minimum Tax (AMT) may apply.
5. No tax on distribution of profits to partners.

Conversion of LLP to a Company

An LLP with at least seven members can register as a company under Section 366 of the Companies Act, 2013 with consent of the majority of partners and no-objection of secured creditors. On registration, all property and liabilities of the LLP vest in the company.

Likely exam questions

1. (Long, 8/16 marks) Define partnership. Explain its essential elements and the different types of partners.
2. (Long, 8/16 marks) What is a Limited Liability Partnership? Explain its salient features and distinguish between LLP, partnership firm and company.
3. (Short, 4 marks) Explain the consequences of non-registration of a partnership firm.
4. (Short, 4 marks) Who is a designated partner? State his responsibilities.
5. (Short, 4 marks) Write a note on the taxation of LLP.

Syllabus topics (RTMNU)

• Definition and essential elements of a contract of sale
• Difference between Sale and Agreement to Sell
• Essentials of a valid contract of sale
• Conditions and Warranties
• Doctrine of Caveat Emptor and its exceptions
• Doctrine of Nemo Dat Quod Non Habet
• Goods and their classification
• Effect of destruction of goods before sale
• Rules regarding the transfer of ownership
• Risk and its relation to ownership
• Delivery of goods: Rules and modes of delivery
• Duties and rights of the Seller and Buyer
• Remedies available to buyer and seller
• Suit for price, damages, and specific performance
• Who is an unpaid seller?
• Rights of an unpaid seller
• Auction Sales

Contract of Sale: Definition and Essential Elements

Definition (Section 4(1), Sale of Goods Act, 1930): A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property (ownership) in goods to the buyer for a price. It includes both a sale and an agreement to sell.

1. Two parties – a buyer and a seller; a person cannot buy his own goods (a partner may buy from the firm).
2. Goods – only movable property; not money, actionable claims or immovable property.
3. Price – consideration must be money. Exchange of goods for goods is barter, not sale.
4. Transfer of property – ownership must pass or be agreed to pass.
5. Essentials of a valid contract – free consent, competent parties, lawful object, as per the Indian Contract Act, 1872.

Sale vs Agreement to Sell

Conditions and Warranties

A condition is a stipulation essential to the main purpose of the contract; its breach gives the right to reject the goods and treat the contract as ended (Sec 12(2)). A warranty is a stipulation collateral to the main purpose; its breach gives only a right to claim damages (Sec 12(3)).

• Implied conditions: title (Sec 14); sale by description (Sec 15); quality or fitness for buyer's known purpose (Sec 16(1)); merchantable quality (Sec 16(2)); sale by sample (Sec 17); wholesomeness of eatables.
• Implied warranties: quiet possession; goods free from any charge or encumbrance; disclosure of dangerous nature of goods.

Doctrine of Caveat Emptor and its Exceptions

Caveat emptor means 'let the buyer beware'. The buyer must examine the goods himself; the seller is not responsible if goods turn out unfit for the buyer's purpose (Sec 16).

Exceptions:

1. Buyer tells the seller the purpose and relies on seller's skill (fitness for purpose).
2. Goods bought by description from a dealer must be of merchantable quality.
3. Usage of trade attaches a condition.
4. Sale by sample – bulk must match sample.
5. Sale by description – goods must match description.
6. Seller's fraud or hiding of defects.
7. Hidden defects not found on reasonable examination.

Nemo Dat Quod Non Habet

It means 'no one can give what he does not have'. A buyer gets no better title than the seller had (Sec 27). If a thief sells stolen goods, the true owner can recover them even from an innocent buyer.

Exceptions: sale by mercantile agent in ordinary business; owner's estoppel; sale by one joint owner in sole possession (Sec 28); seller with voidable title not yet cancelled (Sec 29); seller in possession after sale (Sec 30(1)); buyer in possession before ownership passes (Sec 30(2)); resale by unpaid seller (Sec 54); sale by finder of goods or pledgee in certain cases.

Goods and their Classification; Effect of Destruction

• Existing goods – owned or possessed by seller at the time of contract: (a) specific – identified and agreed (e.g. this Maruti car, number MH-31 XX); (b) ascertained – identified after contract; (c) unascertained – described only by kind (100 quintals of wheat from a godown).
• Future goods – to be produced or acquired after the contract (crop of next season).
• Contingent goods – acquisition depends on an uncertain event.

Destruction: If specific goods have perished without the seller's knowledge at the time of contract, the contract is void (Sec 7). If they perish after an agreement to sell but before risk passes, without fault of either party, the agreement becomes void (Sec 8).

Transfer of Ownership; Risk

1. Unascertained goods – no transfer until goods are ascertained (Sec 18).
2. Specific goods in deliverable state – ownership passes when contract is made, even if payment or delivery is later (Sec 20).
3. Seller has to do something to put goods in deliverable state – passes when done and buyer informed (Sec 21).
4. Goods to be weighed or measured to fix price – passes after that act and notice (Sec 22).
5. Unascertained/future goods – on unconditional appropriation to the contract with assent (Sec 23).
6. Sale on approval or 'sale or return' – when buyer approves, retains beyond time, or does an act adopting the sale (Sec 24).
7. Seller may reserve right of disposal until conditions are met (Sec 25).

Risk follows ownership (Sec 26): unless agreed otherwise, goods remain at seller's risk until ownership passes, whether delivered or not. If delivery is delayed by fault of a party, that party bears the loss.

Delivery: Rules and Modes

Delivery means voluntary transfer of possession from one person to another (Sec 2(2)).

• Actual – physical handing over.
• Symbolic – handing over a means of control, e.g. keys of godown, railway receipt.
• Constructive (attornment) – a third person holding goods acknowledges he now holds them for the buyer.

Rules: delivery and payment are concurrent; place is where goods are at time of sale; delivery at a reasonable time; expenses of putting goods in deliverable state borne by seller; wrong quantity can be rejected; buyer need not accept delivery by instalments; delivery to carrier is delivery to buyer.

Duties and Rights of Seller and Buyer

Remedies: Suit for Price, Damages and Specific Performance

• Seller's remedies: suit for price when ownership has passed or price payable on a fixed day (Sec 55); damages for non-acceptance (Sec 56); damages for anticipatory breach (Sec 60); interest (Sec 61).
• Buyer's remedies: damages for non-delivery (Sec 57); specific performance – court orders delivery of specific/ascertained goods (Sec 58); remedy for breach of warranty (Sec 59); refund of price and interest.

Unpaid Seller and his Rights

Unpaid seller (Sec 45): a seller to whom the whole price has not been paid or tendered, or who received a cheque/bill that was dishonoured.

1. Lien (Sec 47–49) – right to retain goods in his possession until paid. Lost when goods handed to carrier, buyer lawfully gets possession, or seller waives it.
2. Stoppage in transit (Sec 50–52) – when buyer becomes insolvent, seller may stop goods in the carrier's hands.
3. Resale (Sec 54) – for perishable goods, or after notice to buyer, or where right reserved.
4. Rights against buyer personally – suit for price, damages, interest.

Auction Sales (Sec 64)

1. Each lot is a separate contract of sale.
2. The sale is complete on the fall of the hammer; till then a bidder may withdraw.
3. Seller may reserve a right to bid, if notified.
4. Sale may be subject to a reserve price.
5. Use of pretended bidders (puffers) to raise price makes the sale voidable by the buyer.

Likely exam questions

1. (Long, 8/16 marks) Define contract of sale. Explain its essential elements and distinguish between sale and agreement to sell.
2. (Long, 8/16 marks) Who is an unpaid seller? Explain the rights of an unpaid seller against the goods and against the buyer.
3. (Short, 4 marks) Explain the doctrine of caveat emptor and its exceptions.
4. (Short, 4 marks) Distinguish between condition and warranty.
5. (Short, 4 marks) State the rules regarding auction sales.

Syllabus topics (RTMNU)

• Introduction
• The Power of the Central Government to regulate foreign trade
• Importer-Exporter Code Number (IEC)
• Foreign Trade Policy
• Licensing procedures
• Quantitative restrictions
• Search and Seizure provisions
• Penalties and confiscation
• Adjudicating authority
• Appeals and related procedures
• Objectives and Scope of FEMA
• Need for replacing FERA (Foreign Exchange Regulation Act, 1973)
• Difference between FEMA and FERA
• Applicability of FEMA
• Foreign Trade Policy and FEMA
• Regulations related to the Export and Import of Goods and Services
• Impact of FEMA on Indian Economy
• FEMA’s role in promoting Global Business and Foreign Investment
• Recent Amendments and RBI Guidelines

Introduction to the FTDR Act, 1992

The Foreign Trade (Development and Regulation) Act, 1992 replaced the Imports and Exports (Control) Act, 1947. Its aim is to develop and regulate foreign trade by making imports easier and increasing exports from India. It fits the liberalisation policy of 1991 – the stress shifted from 'control' to 'development'.

Power of the Central Government to Regulate Foreign Trade

• Make provisions for development and regulation of foreign trade by order in the Official Gazette (Sec 3(1)).
• Prohibit, restrict or regulate import or export of goods and services or technology (Sec 3(2)).
• Formulate and announce the Foreign Trade Policy (Sec 5).
• Appoint the Director General of Foreign Trade (DGFT) to advise the Government and implement the policy (Sec 6).

Importer-Exporter Code (IEC)

No person can import or export without an IEC issued by the DGFT, unless exempted (Sec 7). The IEC is a 10-digit code linked to the firm's PAN. It is applied for online on the DGFT portal, is valid for life, and must be updated electronically every year as per DGFT rules. The DGFT may suspend or cancel an IEC for contraventions (Sec 8).

Foreign Trade Policy and Licensing Procedures

The Foreign Trade Policy (FTP) 2023 came into force on 1 April 2023. It has no fixed end date and is updated as needed. Its focus: export promotion schemes (Advance Authorisation, EPCG), 'Towns of Export Excellence', e-commerce exports, trade settlement in Indian rupees and a target of USD 2 trillion exports by 2030.

Licensing (authorisation) procedure: goods are 'free', 'restricted' or 'prohibited' as per the ITC(HS) classification. Restricted goods need an authorisation (licence) from the DGFT (Sec 9). Steps: obtain IEC → apply online with documents and fee → scrutiny by the licensing authority → issue of authorisation with conditions → actual-user and export obligation conditions must be fulfilled. The authority may refuse, suspend or cancel it after giving a hearing.

Quantitative Restrictions

Under Sec 9A (added by the 2010 amendment), if the Central Government finds that a product is being imported in such large quantities that it causes or threatens serious injury to domestic industry, it may impose quantitative restrictions (limits on quantity) for a period, after an inquiry. This is a WTO-permitted safeguard measure.

Search and Seizure Provisions

An officer authorised under the Act may enter and search any premises and seize goods, documents or things if there is reason to believe that a contravention has taken place. The search and seizure must follow the procedure of the Code of Criminal Procedure (now the Bharatiya Nagarik Suraksha Sanhita, 2023).

Penalties, Confiscation, Adjudicating Authority and Appeals

• Penalty (Sec 11): a person who imports/exports in contravention of the Act, rules or FTP is liable to a penalty of at least ₹10,000, and up to five times the value of goods, services or technology in the contravention, whichever is more.
• Confiscation: goods, conveyance and packages involved may be confiscated; the owner may be given an option to pay a redemption charge instead.
• Adjudicating authority (Sec 13): the DGFT or an officer authorised by him decides penalties and confiscation after a show-cause notice and personal hearing.
• Appeal (Sec 15): against an order of a subordinate officer – to the DGFT; against an order of the DGFT – to the Central Government; normally within 45 days. The appellate authority may also revise orders (Sec 16).

FEMA, 1999: Objectives and Scope

The Foreign Exchange Management Act, 1999 came into force on 1 June 2000, replacing FERA, 1973. It is administered by the RBI and the Central Government; the Enforcement Directorate investigates contraventions.

1. To facilitate external trade and payments.
2. To promote the orderly development and maintenance of the foreign exchange market in India.
3. To consolidate and amend the law on foreign exchange.

Scope / applicability: extends to the whole of India; also applies to branches, offices and agencies outside India owned or controlled by a person resident in India, and to contraventions committed outside India by such persons. It covers current account transactions (freely allowed subject to reasonable limits, Sec 5) and capital account transactions (as permitted by RBI/Government, Sec 6).

Need for Replacing FERA; FEMA vs FERA

• FERA was made in 1973 when foreign exchange reserves were very low; its aim was to conserve foreign exchange.
• After 1991 liberalisation, reserves improved and India needed foreign investment.
• FERA was harsh – violations were criminal offences with arrest and presumption of guilt.
• WTO commitments and globalisation needed a simpler, investor-friendly law.

Foreign Trade Policy and FEMA

FTP (under FTDR Act) decides what goods and services can be imported or exported. FEMA decides how payments for them are received and made. An exporter needs an IEC under FTP and must realise export proceeds through an Authorised Dealer bank as per FEMA. Both work together for smooth foreign trade.

Regulations on Export and Import of Goods and Services

• Every exporter must declare the full export value to the specified authority (Sec 7 of FEMA) – through customs shipping bills for goods and SOFTEX for software.
• Export proceeds must be realised and brought to India within the period allowed by RBI (check the latest RBI Master Direction on Export of Goods and Services).
• Exports and imports are tracked through RBI's EDPMS and IDPMS systems.
• Import payments are made through an Authorised Dealer Category-I bank, with documents such as bill of entry.
• Advance payment for imports is allowed within limits and with bank guarantee where required.

Impact of FEMA; Role in Global Business and Foreign Investment

1. Freed current account transactions – easier travel, education and business payments.
2. Boosted FDI and FPI through automatic route; India became a major FDI destination.
3. Better foreign exchange reserves and stable rupee market.
4. Encouraged Indian companies to invest abroad (overseas direct investment).
5. Reduced fear among businessmen as offences became civil.
6. Liberalised Remittance Scheme lets residents send up to USD 2,50,000 per financial year abroad.

Recent Amendments and RBI Guidelines

• Rules for non-debt instruments (equity) are made by the Central Government – FEMA (Non-Debt Instruments) Rules, 2019.
• Foreign Exchange Management (Overseas Investment) Rules and Regulations, 2022 simplified investment abroad.
• RBI's 2022 framework allows invoicing and settlement of international trade in Indian rupees through Special Rupee Vostro Accounts.
• Compounding of contraventions has been made simpler and faster.
• RBI keeps issuing Master Directions – students should check the latest RBI circulars.

Likely exam questions

1. (Long, 8/16 marks) Explain the powers of the Central Government under the Foreign Trade (Development and Regulation) Act, 1992. Write a note on IEC and licensing procedure.
2. (Long, 8/16 marks) State the objectives of FEMA, 1999. Why was FERA replaced? Distinguish between FEMA and FERA.
3. (Short, 4 marks) What is the Importer-Exporter Code (IEC)?
4. (Short, 4 marks) Write a note on penalties and appeals under the FTDR Act, 1992.
5. (Short, 4 marks) Explain the impact of FEMA on the Indian economy.

Syllabus topics (RTMNU)

• Concept, Nature, and scope of Intellectual Property
• Importance of IPR in the Global and Indian context
• Types of Intellectual Property
• International treaties and conventions on IPR
• Definition and essentials of a Patent
• Patentable and Non-Patentable Inventions
• Procedure for grant of patents
• Rights and obligations of a patentee
• Infringement and remedies
• Meaning and scope of Copyright
• Areas covered under copyright
• Ownership, assignment, and Licensing of Copyright
• Copyright infringement and remedies
• Definition; Functions; Types of a Trademark
• Registration process and rights of Trademark owners
• Passing off and infringement of trademarks
• Remedies for Trademark violation
• Meaning and Importance of Industrial Designs
• Registration and rights of Design owners
• Protection of Industrial Designs under The Designs Act, 2000
• Infringement and remedies
• Interface of IPR with Artificial Intelligence (AI), Biotechnology, and Digital Media
• IPR in the Pharmaceutical Industry
• IPR and E-commerce

Concept, Nature, Scope and Importance of IPR

Intellectual property means creations of the human mind – inventions, literary and artistic works, brand names, designs. Intellectual Property Rights (IPR) are legal rights given to the creator to use the creation exclusively for a limited period.

• Nature: intangible property; exclusive right; territorial (valid only in the country granting it); limited duration (except trademarks, renewable); can be sold, assigned or licensed.
• Importance: rewards innovation, attracts foreign investment and technology, protects brands and consumers, supports Make in India and start-ups; globally it is linked to trade through WTO. India adopted the National IPR Policy in 2016.

Types of IP and International Treaties

Patents, copyright, trademarks, industrial designs, geographical indications (e.g. Nagpur Orange, Darjeeling Tea), trade secrets, plant varieties and semiconductor layout designs.

• Paris Convention, 1883 – industrial property (patents, marks, designs).
• Berne Convention, 1886 – copyright.
• WIPO (World Intellectual Property Organization), Geneva, set up by 1967 convention.
• TRIPS Agreement, 1995 under WTO – minimum standards of IP protection for all members.
• Madrid Protocol – international trademark registration (India joined in 2013).

Patent: Definition, Essentials, Patentable and Non-patentable Inventions

A patent is an exclusive right granted by the Government under the Patents Act, 1970 to an inventor for an invention, for 20 years from the date of filing, in return for full public disclosure.

Essentials of a patentable invention: (1) novelty – new, not published anywhere; (2) inventive step – not obvious to a skilled person; (3) industrial application – can be made or used in industry.

Not patentable (Sec 3 and 4): frivolous inventions or those against natural laws; inventions harmful to public order, health or environment; mere discovery of a scientific principle; mere new form of a known substance without better efficacy (Sec 3(d)); methods of agriculture; methods of medical treatment; plants and animals (except micro-organisms); mathematical or business methods and computer programmes per se; literary and artistic works; traditional knowledge; inventions relating to atomic energy (Sec 4).

Procedure for Grant; Rights and Obligations of Patentee

1. Filing application with provisional or complete specification at the Patent Office.
2. Publication in the Patent Journal (generally after 18 months).
3. Request for examination within the time allowed by the rules.
4. Examination and First Examination Report; applicant replies to objections.
5. Pre-grant opposition by any person.
6. Grant of patent and publication.
7. Post-grant opposition within one year of publication of grant.

• Rights: exclusive right to make, use, sell or import the product/process (Sec 48); assign or license it; surrender it; sue for infringement.
• Obligations: pay renewal fees; work the patent in India and file statement of working; disclose invention fully; grant compulsory licence if ordered (Sec 84 – first case Natco v. Bayer, 2012).

Patent Infringement and Remedies

Making, using, selling or importing a patented invention without the patentee's consent is infringement. Suit is filed in a District Court or High Court. Remedies: injunction (order to stop), damages or account of profits, and seizure or destruction of infringing goods.

Copyright: Meaning, Scope, Works Covered

Copyright is an exclusive right under the Copyright Act, 1957 to reproduce, publish, perform, translate or adapt an original work. Registration is not compulsory. It protects the expression of an idea, not the idea itself.

• Works covered (Sec 13): original literary works (including computer programmes), dramatic, musical, artistic works, cinematograph films and sound recordings.
• Term: lifetime of the author + 60 years; films and sound recordings – 60 years from publication.

Ownership, Assignment and Licensing of Copyright

• The author is the first owner (Sec 17); exceptions – work made by an employee in the course of employment belongs to the employer; photograph or painting made for a price on request belongs to the person who ordered it.
• Assignment (Sec 18–19) must be in writing; if period not stated, it is 5 years; if territory not stated, it is India.
• Licensing – owner may grant voluntary licences (Sec 30); Copyright Board/Commercial Court may grant compulsory licences in certain cases (Sec 31).

Copyright Infringement and Remedies

Doing any exclusive act without the owner's licence, e.g. selling pirated books or films, is infringement (Sec 51). Fair dealing for private study, research, criticism, review or news reporting is not infringement (Sec 52). Remedies: civil – injunction, damages, accounts; criminal – imprisonment from 6 months up to 3 years and fine from ₹50,000 up to ₹2 lakh (Sec 63); seizure of infringing copies.

Trademark: Definition, Functions, Types

A trademark is a mark capable of graphical representation which distinguishes the goods or services of one person from those of others; it includes a word, logo, shape, packaging or combination of colours (Sec 2(1)(zb), Trade Marks Act, 1999).

• Functions: identifies the source; guarantees quality; advertises the product; protects consumers from confusion.
• Types: word mark (TATA), device/logo (Nike tick), service mark (for services, e.g. banks), collective mark (owned by an association), certification mark (ISI, Agmark), shape mark, sound mark, well-known mark.

Registration Process and Rights of Owner

1. Trademark search.
2. Application to the Registrar of Trade Marks.
3. Examination and examination report.
4. Advertisement in the Trade Marks Journal.
5. Opposition within 4 months by any person.
6. Registration and certificate.

Registration is valid for 10 years and renewable every 10 years indefinitely. The owner gets the exclusive right to use the mark and to sue for infringement (Sec 28).

Passing Off vs Infringement; Remedies

Remedies: injunction, damages or account of profits, delivery up and destruction of goods; criminal punishment of 6 months to 3 years and fine of ₹50,000 to ₹2 lakh (Sec 103).

Industrial Designs under the Designs Act, 2000

A design means the features of shape, configuration, pattern, ornament or composition of lines or colours applied to an article, which appeal to and are judged solely by the eye (Sec 2(d)). It does not include a mode of construction or a trademark. Importance: makes products attractive (e.g. shape of a bottle or mobile phone), adds market value and protects against copying.

• Registration: design must be new or original, not published earlier, distinguishable and not obscene. Application to the Controller of Designs (Patent Office, Kolkata), examination, registration and publication.
• Rights: 'copyright in design' – exclusive right to apply the design for 10 years, extendable by 5 years (total 15).
• Infringement (piracy, Sec 22) and remedies: penalty up to ₹25,000 per contravention payable to the owner, or a suit for damages and injunction.

IPR and AI, Biotechnology, Digital Media, Pharma, E-commerce

• AI: Can an AI be an inventor or author? Indian law requires a human inventor/author; ownership of AI-made content is an open issue.
• Biotechnology: micro-organisms and processes are patentable, plants and animals are not (Sec 3(j)); use of Indian biological resources needs approval under the Biological Diversity Act, 2002.
• Digital media: online piracy of films, music and software; protection of technological measures was added in 2012; intermediaries must remove infringing content on notice under IT rules.
• Pharma: product patents allowed from 2005 to meet TRIPS; Sec 3(d) stops 'evergreening' (Novartis case, 2013); compulsory licences keep medicines affordable; India is a major generic drug maker.
• E-commerce: counterfeit goods on marketplaces, domain-name disputes (treated as passing off – Satyam Infoway v. Sifynet, 2004).

Likely exam questions

1. (Long, 8/16 marks) What is a patent? Explain patentable and non-patentable inventions and the procedure for grant of a patent.
2. (Long, 8/16 marks) Define trademark. Explain its functions, types and the registration process. Distinguish between infringement and passing off.
3. (Short, 4 marks) Explain the nature and importance of intellectual property rights.
4. (Short, 4 marks) Write a note on ownership and assignment of copyright.
5. (Short, 4 marks) What is an industrial design? How is it protected under the Designs Act, 2000?