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Jan Vishwas Bill 2023: Small businesses, competition and public health set up to lose?

Republished By Plato
Republished By Plato

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As reported, both Houses of Parliament recently passed the Jan Vishwas Bill, 2023 (JV Bill). This bill seeks to promote business by reducing penalties and decriminalising offences across 42 legislations. Major intellectual property rights laws – the Copyright Act, 1957, the Patents Act, 1970, the Trade Marks Act, 1999 and the Geographical Indications Act, 1999, have also been amended.

We had discussed salient features of the JV Bill, 2022 along with its limitations in a post here. The major amendments proposed to IP laws remain the same in the 2023 version.

The objective of the JV Bill, 2023 is to promote ‘the ease of doing business in India’ through ‘minimum government, maximum governance’. However, the question that remains to be answered is which kind of business is the government seeking to promote through this law? This question becomes relevant since India has businesses at various stages of growth from start-ups to small-medium scale enterprises to big businesses. In this regard, at least from an IP standpoint, it appears that bigger businesses stand to gain while smaller ones may suffer. This could have long term adverse implications on competition, public health and consumer welfare.

This becomes evident from the following amendments:

Reduced penalty for failure to file or refusal to file Form 27 (working requirements): As per Section 84(c), patents need to be ‘worked’ in India failing which competitors can obtain compulsory licenses to make and sell the patented invention. This is a vital provision that seeks to foster competition in cases where patentees are unable to meet local demands. To enable competitors and the public to monitor compliance with this requirement, the Patent Act requires patentees to file Form 27 with the Patent Office detailing the manner in which their patents have been worked in India.

To ensure compliance, the Patent Act originally prescribed a penalty of INR 10,00,000 (Rupees Ten Lakhs) for non-filing of Form 27 or intentional, incomplete filing. Within the scheme of the Patent Act, a penalty of INR 10,00,000 (Rupees Ten Lakhs) can be considered to be harsh since it is the maximum amount of penalty prescribed under this legislation. This provision was therefore put in place to ensure compliance and to deter non-compliance showing that filing of Form 27 is a significant and substantive part of the Indian patent regime.

The JV Bill 2023 significantly changes the scheme of the law by proposing a ten-fold reduction in penalty for non-filing or refusal to file Form 27. A reduction in penalty automatically reduces the seriousness of the requirement and may even indicate that filing Form 27 is merely a procedural requirement without substantive implications. In the absence of this form, competitors may not be able to differentiate between deadwood patents and patents that are actually being worked (i.e. patents that are either locally manufactured or at least imported into India. The scope of the term ‘worked’ is debated). This in turn limits their ability to invoke Section 84(c) and reduces Section 84(c) into a mere paper tiger. Smaller businesses or competitors that have the manufacturing capability to make patented inventions may not be able to do so since their ability to obtain compulsory licenses may be reduced. Compulsory licenses form a core part of the Indian patent system and the proposed amendments dilute this system and can have long term adverse effects on competition.

  • Copyright:

As we highlighted in our previous post, the JV Bills 2022 and 2023 remove Section 68 from the Copyright Act. Section 68 punishes, with imprisonment, persons who make false statements for the purpose of deceiving or influencing any authority or officer. It remains unclear why this provision should have been removed. Deceiving or making false statements to an authority is a serious issue which should not be decriminalised.

However, the real issue for smaller businesses, in the copyright context, has always been baseless threats of criminal action. The existing scheme of the copyright act and judicial decisions on criminal processes and penalties, make it very easy for copyright owners to abuse their power. Copyright owners use the system to threaten and scare users and extort license fees (especially prevalent in the software and music industry) which can impact the ease of doing business. Given the existence of Section 52 which provides user rights that are not infringements, establishing ‘guilt’ is very difficult in all cases of alleged infringement and powerful criminal tools at the hands of copyright owners can stifle creativity, speech and access to knowledge.

The need of the hour is for the law to be amended to differentiate between different acts of copyright infringement, limit criminalisation only to mass piracy and not routine infringement and require prior judicial cognisance as a pre-condition to criminal investigation.

  • Pharmaceutical Trademarks:

Given that brand names of entirely different drug formulations can be similar or same (here), as also evidenced by record levels of pharmaceutical trademark litigation in India, the JV Bill 2023 should have addressed this issue by introducing penalties for such deception under the trademarks act. Such a provision might have decreased risk-taking behaviour of pharmaceutical companies that adopt similar names for drugs that treat very different conditions. We have blogged about this issue several times in the past.

Instead, as explained by Prashant in his post on Scroll, the JV Bill 2023, relaxes penalties under Section 42 of the Pharmacy Act by replacing imprisonment with a mere fine of Rs 20,000 which will dramatically increase the risk-taking behaviour of pharmacies (in the context of prescribing correct drugs) to the detriment of public health in India.

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