Law Pertaining To Cheque Bouncing.

Through this post I intend to give brief info to the readers about the steps to take in legal remedy under Negotiable Instruments Act while facing a situation where a cheque given to her by someone has bounced.

I sometimes receive query from people about a bounced cheque. What I, earnestly, request all is to immediately send a notice otherwise proceedings under Negotiable Instruments Act before a Magistrate cannot commence. A person has other remedies as well. Like filing a civil suit for recovery for the amount. But the criminal proceedings before a Magistrate are an excellent option for getting the amount recovered faster because of the implications of criminal sentencing.

This post also presumes that the cheque was issued towards a debt or a legally enforceable liability. In other situations, like gifts, donations, present, etc., an offence under Negotiable Instruments Act, 1881 cannot be made out for a bounced cheque. Another important aspect is that a cheque has a shelf-life / validity of only three months from the date of issue–this used to six months earlier.

The timeline is of utmost importance.

For instance, if you deposited a cheque on May 31st and should you come to know on Monday, June 03, that the cheque has bounced for reasons like “insufficient funds” “payment stopped” “refer to drawer” etc., you need to inform the person who issued the cheque.

It is mandatory that you send a demand notice of the amount of the cheque to the person who issued the cheque within 30 days from the day you received the information of the bouncing. Hence, on or before July 02, your notice should have been dispatched to this person.

The notice does not have any prescribed format or a manner of sending. Simply put, the purpose of the notice is to make the person aware that his cheque has bounced and he should pay up. It is not even required to be sent through a lawyer but it is very important that a counsel sends it so that there isn’t anything left out. The notice can become a point of a fierce battle during trial so services of your attorney are surely advisable to make sure the essential elements of the notice are covered.

The notice must contain the following information:

1. You presented the cheque within its period of validity;
2. Factum of debt / legally enforceable liability;
3. Informing about the reason of dishonour of cheque;
4. Calling upon to pay him the amount due; and
5. Inform him that you are giving him 15 days to pay or you will initiate actions.

The notice, ideally, should be sent via registered post / speed post along with courier. Proof of service of this notice is very important.

It is paramount that the person should receive the notice. In one of the rulings, Bombay High Court has recently even held that this notice can also be sent via email. It makes the job very easy, provided you have the email id of the person. Once the person receives the notice, he should pay up the amount within 15 days of receiving the notice. If he doesn’t, then the person issuing notice has 30 days to initiate proceedings before a Magistrate.

So in the given example, Lets say that you sent the notice on June 04, next day of receiving the information from your bank. Taking a buffer of three days of a letter reaching, presumably the notice should reach by June 08 maximum. Meaning thereby, on or before June 23, the person should pay the amount due. However, if the amount is not paid before June 23, then definitely by July 22 a complaint before a Magistrate should be filed.

Word of caution: Even a single day’s delay in sending the notice beyond 30 days of receiving information from the bank is fatal. The Magistrates, in rare instances however, condone delay, upon being satisfied of genuineness of delay, in the later 30 days after the 15 days period has passed. Meaning thereby, the notice should definitely go before expiry of 30 days from receiving information of cheque getting bounced. If, however, after the expiry of the 15 days period there is a genuine delay in not filing the complaint before the Magistrate within 30 days, the Magistrate might allow the complaint to proceed.

To make it even simpler, here is the math on this. Day 1 cheque is bounced, from day 2 you have 30 days to dispatch notice–this period is not extendable. From day 31, add 4 days of getting the notice delivered. From day 35 add 15 days of buffer period for the person to pay. From day 50 you have 30 days to file a complaint before the Magistrate.

After the complaint is filed, the process is a separate story altogether. Matters are usually referred to Mediation and the Accused / Respondent in most cases choose not to contest the matter and settle. However, this post is just to guide the reader the steps to take when facing such a situation.

All the best.

Lawyer’s Fees: Justifying The UNJUSTIFIABLE?

“Your bill is very escalated.”

“I don’t think you have put in 4 man-hours of your time in this draft.”

“You cannot equate yourself with your ex-firm in billing.”

The list goes on. These are some of the kind words which some people have used for evading, not merely avoiding, payments to their lawyers or cutting their lawyers’ bill to an illogical amount. The peers who are now in private practice routinely share such soothing words from their Clients who suddenly become wiser once they switch from a law firm to a counsel with private practice.

Some of the gems who have used such kind words to their lawyers have, in the course of their lives, worked in law firms and raised such bills to their client. When they join as an in-house counsel, these very bills become objectionable.

Worst case scenario is with some Clients who happily pay law firms for sending a 21 word letter for a routine follow up but will not pay to their counsel who had done substantial amount of work.

When these people use the word that the bill is escalated, I wonder why do they remain silent when their lawyer is revising the draft repeatedly to augment it to make it far better than a Senior Associate in a law firm can prepare. This genre of Client is happy with his lawyer putting in extra effort but will become unhappy if the lawyer is charging 25% less than what he routinely pay to a run-of-the-mill law firm.

To deal with such a Client it simple.

For instance, when a Client gives an example that some lawyers are charging 15% lesser than you, please tell him that he has not done his research, he can very well find people who are charging 50% lesser. By this method, you will make sure that your Client saves 35% more on his billing so that you can focus on real Clients than these gems!

No Rights In A NON-used, Registered, Trademark?

In recent pronouncements, Delhi High Court has come down heavily against companies which, though registered proprietor of, never used the trade marks on their own choice.

Briefly stated, the law of the trade mark is that registered or not, any person can claim priority in a coined/invented trade mark and prevent others from using the same/deceptively similar mark lest people might confuse the source of the goods. The cardinal principle of IP law as, as taught by a former senior and a very seasoned lawyer: There can be only one mark and one source.

Non use of a trade mark, if it is on the Register, gives anyone a statutory right to file a cancellation petition before the Registrar of trade Mark under Section 47 of the trade Marks Act, 1999 to have the mark removed. The period to initiate the petition must be five years and one month prior to initiate the petition.

Now the Courts way up to Supreme Court realise that the use of a mark can be in various ways and there is no limitation for a person to use a mark. However, the Courts should see the evidence of use, even in any form.

Two prominent cases are Virumal Praveen Kumar vs. Needle Industries (India) and Fedders Lloyd Corporation Ltd. & Anr. Vs. Fedders Corporation.

In Needle Industries ruling, the High Court held the following in paragraph 24:

In view of the aforesaid factual position what has to be considered is whether the factum of the registration of the trademark in the name of appellant is sufficient to grant relief in favor of the respondents or whether something more is required. This has to be considered in view of the submission of learned counsel for the appellant that the trademark cannot exist in vacuum and in view of their being a non-user of trademark since 1981, the respondents are not entitled to any protection.

Quoting from the Cluett Peabody & Co. Inc. vs Arrow Apparals, passed by His Honour S. Kapadia in Bombay High Court, their Honours held further in paragraph 26:

Though delay be itself would not be a defense but if there was a non-user for a long period of time the mark would lose its distinctiveness or the mark is then permitted to die for non-user. The Bombay High Court observed “It is well settled that lapse of time may bring about a change in the state of things in such a manner that to grant injunction in favor of the plaintiff’s would be harsh and it may cause irreparable damage or harm to the rights of the defendants.” Thus the Bombay High Court was of the view that non-use of trademark does have a bearing in action for infringement specially at the interlocutory stage and equities would have to be balanced in such a situation. The Bombay High Court had further laid down certain principles in this behalf which have been reproduced in the impugned judgment. In point (f) of the order dated 28th March, 2000 it is stated that the object of the Act is to protect the right and not be a source of monopoly. In point (j) it has been observed that a mark can lose its distinctiveness by non-user. Thus the enforcement of the right of exclusive use of a trade mark will depend on continuous use of the mark by the proprietor. In point (k) it has been observed that the court shall not protect the right of proprietor unless there is sale of the articles to which trade mark is attached or related. (emphasis added)

In paragraph 23 of the Fedders Judgement, their Honours in the Division Bench held as follows:

Though the object of the Trade Marks Act is to protect the proprietary rights of a registered trademark holder, at the same time the object is not to facilitate any monopoly of such registered trade mark holder, despite non use of the trademark by him as contemplated by the Act. A trademark has no meaning, even if it is registered, unless it is used in relation to goods and/or services. A Trademark which drops out of the use, dies when there are no goods offered for sale as there is no use of the trademark. The mark can lose its distinctiveness by non use, where non use is on the part of registered trade mark holder but not on account of external factors beyond the control of such registered trade mark holder.

After the pronouncements of their Honours at the Division Bench, the aspect of non use in relation to defense set up in infringement action has notably been discussed in the following three rulings.

In Sun Pharma vs Cipla, His Honour R. S. Endlaw was dealing with a situation where the Defendant took up a defense that the Plaintiff has not used the registered mark for considerable length of time and was, therefore, disentitled for any relief, much less interim. His Honour examined at length and held the following in paragraph 19:

The law laid down thus appears to be that trade mark cannot be got registered and held by persons as ?investors? only and with no intention whatsoever to use the same in connection with any goods and services. Even though I feel that in present times of encouraging creativity and rights in ?abstract properties? viz in domain names, there should be no bar to professionals / intellectuals creating rights in marks and being permitted to profiteer from them and there is a need for re-think on this position, I find that even within the frame work of the existing law, in the present case, there is sufficient trade connection between the registered trade mark and the business/activities of the plaintiff and the plaintiff cannot be termed as a mere trafficker in the trade mark. The Apex Court itself noted the complexities and delays in modern times in starting a business and without the mark being taken off the Register, I find that action for infringement of registered trade mark cannot be defeated for disuse. We have in recent times also seen new scientific research finding well known brands in the field of pharmaceuticals to be harmful and the said research findings being reversed after a decade or more. It would be travesty to allow to be extinguished rights in such well known brands in the interregnum. Such rights have come to be known as ?intellectual properties? and there is no reason why facets of tangible property which can be bought and retained by persons who have no use therefor and merely as investors, ought not to apply to ?intellectual property? as well. In present day times of surrogacy, when the child may not belong to the mother from whose womb born and of sale for premium of automobile number plates, there is no reason why insistence on owners using or intending to use the mark or why restrictions in the name of trafficking, ought to continue vis-?-vis trade marks.

However, in this case, His Honour also found evidence that the Plaintiff was not sitting on the mark and was in fact, acting on it.

In the following two cases, neither the Court found any evidence of any use by the proprietor of the mark nor found any circumstances which prevented him from using it. The cases, as they turned out rightly, were dismissed on this ground alone.

In Smithkline Beecham Plc. & Anr vs Sunil Sarmalkar, His Honour Valmiki J. Mehta dismissed the suit of the Plaintiff, where the Defendants were no longer appearing on the ground of non use alone. In paragraph 7, His Honour held:

So far as the fact that the trade mark PANAMAX is registered in favour of the plaintiffs is concerned, the same cannot be disputed, however mere registration of a trade mark cannot confer a right unless goods have been sold under the said trade mark. The entire issue of distinctiveness qua the trade mark is necessarily with reference to sales made under a trade mark. If there are no sales there cannot be distinctiveness……

Quoting paragraphs from Fedders and Needle Industries, His Honour also observed that the Plaintiff did not even file a single document with respect of the tablet. The Judge held in paragraph no. 11:

So far as the alternative case of passing off with respect to the trade mark PANAMAX is concerned, even that right with respect to passing off has to be established by prior use of the trade mark PANAMAX by the plaintiffs as compared to the defendants. Actual use, as already stated above, is only by showing sales in the market. Sales admittedly have not been proved and established on record. A self-serving statement in an affidavit by way of evidence cannot be a substitute for actual discharge of onus of proof which is required to be done by leading credible evidence and which surely could have been done in this case inasmuch as if the plaintiff no.1 has huge sales it was not difficult at all for the plaintiff no. 1 to prove the sales of the paracetamol tablets under the trade mark PANAMAX.

In more recent pronouncement of Allergan Inc vs Intas Pharmaceuticals, His Honour Valmiki J. Mehta was dealing with the infringement case set up for trade marks BOTOX and BTX-A, both registered marks.

The Defendant stated that it has no conflict whatsoever with Botox and the Plaintiff conceded that the trade mark BTX-A, despite registered since the year 2002, was never used till 2012 in India. The Plaintiff stressed that even without the use of the mark, the registration should confer rights to prevent someone else using an identical/deceptively similar mark.

Relying upon Needle Industries and Fedders, His Honour held in paragraph 6:

A reference to the aforesaid para shows that though registration of the trademark is intended to confer ownership rights qua the trademark which is registered, however, the object is not to facilitate any monopoly of such registered trademark holder despite non-use of the trademark. The Division Bench has also observed that a trademark has no meaning, even if it is registered, unless, it is used in relation to goods and services. The Division Bench has categorically observed that the trademark which drops out of the use dies when there are no goods under the trademark available for sale.

In paragraph 8, His Honour held:

A reading of the aforesaid two judgments leaves no manner of doubt that the entire object of trademark law in conferring ownership rights by registration of trademark is that the trademark becomes distinctive qua the goods on account of the sale of goods with such trademark in the market.

If there is no sale, there does not arise the issue of distinctiveness, and mere registration without sales with the trademark does not entitle grant of relief of infringement or passing off. Not only there is no distinctiveness without user of the mark but the judgments observe that the object of registration is not to allow a person to squat on the trademark i.e. continuation of the claim to the trademark without using the same.

Though the counsel for the Plaintiff relied upon the judgements of the Supreme Court for protecting persons claiming transborder reputation and use in special circumstances, His Honour categorically held that since the pleadings made no mention about any transborder reputation or any circumstances preventing the company to launch the product, the reliance was misplaced.

Though the matters shall travel to the Appeals Court but what is clear from the ruling is this:

The law pertaining to non use is a given. If you are not using the mark for a considerable length of time, merely flashing a registration certificate shall not help, more so when you are seeking interim protection against a person.

Novartis’s Gleevec: Supreme Court Brings Patent Law To New Heights.

The least popular branch of intellectual property (IP) law–patents–got the most coverage in media world over, thanks to the Supreme Court’s verdict today in Novartis patent litigation for Gleevec application.

The judgement of Supreme Court can be accessed here: Gleevec (pdf) (HTML)

Brief facts:

Novartis applied for a patent in India for a anti cancer drug by the name of Gleevec. Even before the application was taken up for consideration, it attracted 5 pre-grant opposition proceedings from Cancer Patients Aid, Natco, Ranbaxy, Cipla & Hetro Drugs. On December 15, 2005, Assistant Controller of Patents heard all 5 proceedings together and rejected patent application by Novartis.

Controller held that the invention claimed by the appellant was anticipated by prior publication, i.e., the Zimmermann patent; that the invention claimed by the appellant was obvious to a person skilled in the art in view of the disclosure provided in the Zimmermann patent specifications; and further that the patentability of the alleged invention was disallowed by section 3(d) of the Act

Novartis challenged the Controller’s order before the Madras High Court in 5 writ petition and filed 2 separate writ petitions challenging constitutionality of Section 3(d) of the Patents Act. Once the High Court dismissed the writ petitions challenging 3(d), Novartis did not prefer any appeal to the Supreme Court. The other bunch of 5 petitions were transferred to Intellectual Property Appellate Board (IPAB) for adjudication.

IPAB reversed Controller’s decisions in all 5 petitions to the extent that Novartis invention satisfied the tests of novelty and non-obviousness. The IPAB, however, held that the patentability of the subject product was hit by section 3(d) of the Act. In an unprecedented manner, and with the Consent of the parties to save considerable time, Their Honours in the Supreme Court decided to hear the appales against the IPAB order though the Appellate Court was Madras High Court.

The 5 Objectors stated before the SC that the TRIPS agreement has sufficient flexibility for Member States to control Patent rights to guard against adverse impact on public health.

The SC also noted that amended portion of section 3(d) clearly sets up a second tier of qualifying standards for chemical substances / pharmaceutical products in order to leave the door open for true and genuine inventions but, at the same time, to check any attempt at repetitive patenting or extension of the patent term on spurious grounds.

Furthermore, the Bench also noted that the Zimmermann patent, Novartis applied for, and in several cases obtained, patent in the US not only for the beta and alpha crystalline forms of Imatinib Mesylate, but also for Imatinib in a number of different forms. Novartis, however, never asked for any patent for Imatinib Mesylate in non-crystalline form, for the simple reason that it had always maintained that Imatinib Mesylate is fully a part of the Zimmermann patent and does not call for any separate patent.

This factor also played a crucial role before the Bench since Novartis maintained in the Indian application that Gleevec was a new substance as applied took a contrary position to earlier patent applications and even while sending a cease and desist letter to Natco.

When Novartis cited foreign rulings in support of the arguments, the Bench held as following:

“In this country the law of patent, after the introduction of product patent for all kinds of substances in the patent regime, is in its infancy. We certainly do not wish the law of patent in this country to develop on lines where there may be a vast gap between the coverage and the disclosure under the patent; where the scope of the patent is determined not on the intrinsic worth of the invention but by the artful drafting of its claims by skillful lawyers, and where patents are traded as a commodity not for production and marketing of the patented products but to search for someone who may be sued for infringement of the patent.”

Finally, in paragraph 164 of the judgement, SC has stated that while going through the Zimmermann patent one cannot but feel that it relates to some very serious, important and valuable researches. The subject patent application (Gleevec), on the other hand, appears to be a loosely assembled, cut-and-paste job, drawing heavily upon the Zimmermann patent.

Charity programme by Novartis:

Though a lot has been written & spoken about the charity programme by Novartis, few points are very important to note. IPAB in its order notes that : -

“We are fully conscious of the Appellant’s (Novartis’s) benevolent GIPAP program for free distribution of GLEEVEC to certain cancer patients. But as per information furnished in its written counter–argument by R 3 that when the Appellant was holding the right as Exclusive Marketing Rights on GLEEVEC it used to charge Rs.1,20,000/- per month for a required dose of the drug from a cancer patient, not disputed by the Appellant, which in our view is too un-affordable to the poor cancer patients in India. Thus, we also observe that a grant of product patent on this application can create a havoc to the lives of poor people and their families affected with the cancer for which this drug is effective.

Furthermore, Supreme Court in the order also notes that when asking Novartis about the massive pricing of the drugs, it stated to run a huge charity programme for free distribution of drugs as well to the needy. However, when the Supreme Court questioned if Novartis can abolish the charity programme and rework on the pricing, Novartis could not reply satisfactorily.

Point being, the Court were aware of the Charity argument of Novartis but the price difference between a monthly dosage of 120 thousands and 8 thousands was astonishing.

TRIPS agreement versus local laws:

The most crucial aspect which weighed in before Their Honours at the Bench was the contribution which the manufacturers of Indian generic industry had made world over to supply life saving drugs to poor countries. Two letters which the Bench quoted are relevant as well. One was dated 17 December, 2004, from Director, Dept of AIDS at WHO writing to Union Health Minister stating that WHO is aware that TRIPS compliance was important but also is most important that India continues to export cheaper medicines to not only Member States but also countries which are poor. Some countries which WHO mentioned where India is a massive supplier of cheap anti cancer life saving generic drugs were Ghana, Lesotho, Malawi, Namibia, Bangladesh, etc.

Another letter was from UNAIDS asking India to make sure that the Patent regime after complying with TRIPS does not restrict / undermine India’s position as a leader in supplying affordable life saving drugs to countries that do not have manufacturing capacity to manufacture such drugs.

It is, therefore, a fallacy to say that Indian Patent Act is not in consonance with the requirements under TRIPS or that Courts were not mindful of the R&D and charities done by Novartis. However, at the end of the day, courts will have to interpret provisions of Patent Act keeping India as a jurisdiction because Patent provisions, unlike trademarks and copyright, are not enforceable internationally.

In Gleevec ruling, SC has displayed as excellent and pragmatic approach in dealing with one of the most complicated branches of law. The judgement, apart from being excellently sound in law, is written in such an elaborate manner that any person with even basic knowledge about patent law can understand and appreciate it.

After a long time, an excellent IP ruling from  the Supreme Court.

Criticism Of Politicians: Allowed in France. Punishable In India.

European Court of Human Rights (ECHR) has issued a press release today which is available here:

DKMahant Eon v. France Insulting the President of France Freedom of expression

Brief background:

A French National, Eon, on August 28, 2008 when Nicolas Sarkozy, President of France was visiting, waved a placard saying “Casse toi pov’con (Get lost, you sad prick”). This phrase the President himself spoke to a farmer few months earlier when the farmer refused to shake hands with the President.

Lower Courts held that this act by Eon was indeed an insult to the President. Eon appealed the verdict on April 12, 2010 with the ECHR on the point that his conviction for act of insulting the President of France was an infringement of his freedom of speech and expression.

In the attached press release, the Court has decided that the conviction was indeed wrong and an “interference by public authority” with his right to freedom of expression.

Albeit the Court agreed that the phrase in question was indeed offensive but it had to be taken in an overall context of the case. Ultimately what weighed in with the Court was the balance tilting in favour of free discussion of matters of public interest.

Now compare the situation at hand when Govt of India and the States are leaving no stones unturned in arresting cartoonists, bloggers and anyone whomsoever has been able to express herself, even by a tweet or liking a Facebook post, to the annoyance of our Maibaaps (RULERS).

Disclaimer: Vide this post, under Section 66A of the IT Act, 2000, I intend to cause no annoyance to any person who can exercise the powers under the Act but does not UNDERSTAND the law.

God only help us.

Intellectual Property Rights by Ananth Padmanabhan @LexisNexisIndia

I jumped at the opportunity given by LexisNexis to try my hand at this new book, Intellectual Property Rights-Infringement and Remedies by Ananth Padmanabhan. After buying the revised Venkateswaran on Passing Off last year, I wasn’t a big fan of LexisNexis though it is one of my most preferred publishing house.

Well begun is half done. Not just a cliche. In the preface alone, the Author does a great job and appreciates the various schools of thought in commentary books we have. He also notes what is the main problem in usual ones.

The first chapter gives out the brief details of various forms of injunctions granted by Courts and various heads / branches of the intellectual property rights. Next chapter deals with infringement of trade marks and reliefs. Chapter three deals with copyright. Fourth chapter discusses patents. Author covered designs infringement in fifth chapter. The last chapter gives brief detail on common law rights focusing on the trade secret aspects.

The book, like others, has a compilation of various statutes and rules of different laws covering intellectual property rights.

The attention with which the Author has dealt with the topics in each of the branch of intellectual property law is magnificent, fantastic and surprisingly elaborate–without giving legal jargon. The Author has not given paragraphs after paragraphs of a judgement and that has helped in the book giving us his  perspective–which is a cardinal rule of a book–rather than a lecture flowing through a Court ruling.

Only after going through the book can one realise that the purpose of the author was not just to write 500 odd pages but to give us his understanding of plethora of judgement and commentaries summarised in these pages about various aspects of intellectual property right. The table of contents in each chapter is very helpful and will assist the reader to reach the precise proposition.

At various instances, the Author has given a detailed study where he has disagreed with a particular judgement. This is not something which we usually get to read in a typical commentary book. The Author has made sure that the disagreement with a particular judgement is explained properly rather than just branding a judgement as non application of mind.

Though the Appendix has 10 acts / rules, what is missing is Trade and Merchandise Marks Act 1958, Trade and Merchandise Marks Rules 1959, Designs Act, 1911 and the Designs Rules, 1933 which surely come handy.

The book is must for anyone studying / practicing / interested in intellectual property laws. I am really glad that I have this one from LexisNexis in my library next to the Nimmer, Copinger and Venkateswaran among others.

Transfer List of 463 Delhi Judges

Delhi High Court has made extensive changes day before in the roster of 270 Judges of Delhi’s lower Judiciary and 193 Judges of Higher Judiciary. The files can be accessed here:

Judicial Transfers CJ DK21Feb13

Judicial Transfers ADJ DK21Feb13