Here’s why Intellectual Property Rights is gaining more importance and how the dynamics have changed

The modern Corporation owes its origin to the Joint Stock Companies of Great Britain which marked the aggregation of capital without the liability or risk to stockholders apart from loss of capital employed and marked the shift from an agrarian - revenue yield based economic-governmental model to a Mercantilist-Industrial-tax based one.

The capital accumulated was utilized in buying land for factories, erecting buildings to house the machinery. These were mainly the company property due to which the whole body of accounts, tax and accounting standards has concepts of movable and immovable property as the above fell mainly within these brackets.

With the advent of the knowledge revolution which can be said to start with computing industry and its allied fields, a new form of property came into being. Incorporeal property called Intellectual Property which might or might not have material physical manifestation or product but which recognized the “intellectual capital” and “intellectual labour”.

Due to the economics of outsourcing the modern corporations maybe behemoths in turnover but in many cases are mere repository of Intellectual Property which they license to manufacturers or franchisees. And Intellectual property of an Apple is no less valuable because its goods are manufactured by a Foxconn in China.

The “Brand” built due to valuable intellectual property has a recall value and people associate “Brands” with certain qualities and attributes which are unique. Thus the “Brand” and by “Implication” the Intellectual Property has to be protected.

A “GULF” or an “Ashok Leyland” brand name for instance does give a consumer a comfort of track record, quality, integrity, after sales service and support and value for money.

Bulk of modern day property and wealth is intellectual and needs to be protected. Intellectual capital is created by expending intellect by Employees who work for these corporations as inventors, designers etc.

There lies the paradox of the basic framework of Contract Act , Criminal Law and Evidence Act being Victorian in vintage (“Touch” “Feel” “See”) while the economy and its concepts have moved on rapidly (“click” “Share” “Upload”).

While the Contract Act has a jaundiced view towards an agreement in restraint of Trade and profession, such a restraint is key to companies who bear costs of research and development carried out by their employees and the fruits of whose intellectual Labour should be for the Company to “pluck”. If there is to be a “reasonable” restraint, what constitutes “reasonable”?

The basic employment contract makes it mandatory for the employee to maintain confidentiality of Company data and information. This is because information and data are valuable Intellectual Property for the Company. Any action that would jeopardize its secrecy would be against Company interest. Would a mail sent by an employee from his official mail address to his personal e-mail address be construed as a breach? After all the personal mail server can be hacked and the data maybe exposed to theft. How careful is “really” careful?

Recent instances have brought the spotlight on this aspect. Was Hillary Clinton justified in using her personal mail servers while she was Secretary of State? There are no white or black answers. It is “yin” and “yang” where the black has a white but the white may also have a black!

The sensible thing to do would be to not be in a position where any adverse implication may be drawn unless there are cogent reasons for doing so. “Caesar’s wife must be above suspicion” and a person should not put himself /herself in a position where duty and interest is even seen to be conflicting.

Cloud Computing makes storage and sharing and access very convenient but has the potential of being hacked. In this case whose is the liability? Can the provider escape liability if he demonstrates duty of care and to what extent?

Indian Courts have been sensitive and have evolved concept by judicial pronouncements to plug any gaps in legislation.

Classic case of the above is the “Ashok Kumar” order [called as “John Doe” in English speaking countries] given in Indian by courts to protect telecast rights of sporting events against unknown infringers of copyright.

This has evolved to tackle the factum of unknown infringers of copyrights and necessity of a blanket order from the court to enable seizing material evidence before it is destroyed and to stop infringers of IPR.

Again this has arisen because in classic adversarial litigation, you need a known infringer/defendant and even though the evidence can be irretrievably erased by pressing a “delete” button, the burden or onus of proving the case beyond reasonable doubt has not lightened due to the nature of the infringement or criminality being intellectual.

This is indeed an exciting time as we can see law being evolved and created to match the advances in technology and commerce.

(The article is authored by Mayoor Godbole - In-house Counsel, Hinduja Group)


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