CHAPTER 4 : ECONOMIC LAWS

Intellectual property
Intellectual property (IP) refers to creations of the mind, such as inventions; literary and
artistic works; designs; and symbols. IP is protected in law by, for example, patent,
trademark, copyright which enable people to earn recognition or financial benefit from what
they invent or create.

Intellectual property rights

Intellectual property Rights are the rights on the intellectual property given to the inventor or
creator limited period as an incentive for the time, labour and money invested by him.
Holder of these rights are generally entitled to exercise various rights about the subject
matter of the intellectual property.

Nature & characteristics of Intellectual Property Right:

1. Intangible property:
IP does not cover the created physical object but retains the conceptual development
behind the physical object. Intellectual property law does not deal with the material
object in which works of the mind have represented.

2. Rights & duties

IP not only gives rise to rights of ownership but also to duties. In relation to his
work/product, the IP owner has the right to conduct such actions. He is entitled
exclusively to produce, copy the work, market the work, etc.

3. creation of statute:
Intellectual property is derived from common law, and it is covered under specific laws.

4. Territoriality
Intellectual property laws are mainly territorial and apply only within the relevant
competence. Although the TRIPS agreement sets the minimum standard in its
respective municipal laws for all nations, the IP laws around the world are not
harmoniously United.

5. Assignable
They should obviously be granted because they are privileges. A dichotomy between
rights to intellectual property and the actual form in which the work is embedded is
conceivable. IP may be bought, sold or licensed, employed, or affiliated.

6. Dynamism
The IPR is constantly changing. The IP sector is also developing accordingly, as
technology in all areas of human activities is changing exponentially. In accordance
with the demand for scientific and technological advancement the scope of its defense
is being extended and new items are being added to the IPRs sector.
SCOPE OF INTELLECTUAL PROPERTY RIGHTS
agreements in the form of TRIPS covers eight types of intellectual property

1. Patent
A patent is an exclusive right granted for an invention. Generally speaking, a patent provides
the patent owner with the right to decide how - or whether - the invention can be used by
others. In exchange for this right, the patent owner makes technical information about the
invention publicly available in the published patent document.

2. Copyright
Copyright is a legal term used to describe the rights that creators have over their literary and
artistic works. Works covered by copyright range from books, music, paintings, sculpture and
films, to computer programs, databases, advertisements, maps and technical drawings.

3. Trademarks
A trademark is a sign capable of distinguishing the goods or services of one enterprise from
those of other enterprises. Trademarks date back to ancient times when artisans used to put
their signature or "mark" on their products.

4. Industrial designs
An industrial design constitutes the ornamental or aesthetic aspect of an article. A design may
consist of three-dimensional features, such as the shape or surface of an article, or of two-
dimensional features, such as patterns, lines or colour.

5. Geographical indications
Geographical indications and appellations of origin are signs used on goods that have a
specific geographical origin and possess qualities, a reputation or characteristics that are
essentially attributable to that place of origin. Most commonly, a geographical indication
includes the name of the place of origin of the goods. Example Basmathi rice, Banarasi silks,
Darjeeling tea.

6. Trade secrets
Trade secrets are IP rights on confidential information which may be sold or licensed. The
unauthorized acquisition, use or disclosure of such secret information in a manner contrary to
honest commercial practices by others is regarded as an unfair practice and a violation of the
trade secret protection.

7. Plant variety Right

Plant variety rights, also Known as Plant breeders’ rights, are intellectual property rights
granted to the breeders of new varieties of plants. These rights grant the plant breeder control
over the propagation material (including seeds, cuttings, divisions, tissue culture)and
harvested material of a new variety.
OBJECTIVES/ADVANTAGES OF PROTECTING INTELLECTUAL PROPERTY
RIGHTS
Intellectual property has started assuming a greater significance with the rise of the
knowledge economy. Intellectual property rights when protected by the law certainly give
numerous advantages not only to the creators of the same but also to society. The various
advantages of protecting intellectual property rights can be studied as under:
1. Creation of Wealth:
Intellectual property is the primary means of creating wealth in society. Goods and services
created through intellectual property results in the increased wealth of inventors and
entrepreneurs benefitting the entire society at large.

2. Promotion of Healthy Competition:

The protection of intellectual property rights contributes to healthy competition among the
market players by promoting patents, trademarks, and copyrights.

3. Contribution to Economic Development:

By promoting healthy competition among the market players and by making the best use of
available resources, intellectual property rights contribute to the economic development of
the nation.

4. Reduction of Costs:
Intellectual property rights indirectly lead to the reduction of the cost of production through
better and improved methods of production and optimum use of available resources.

5. Controls Piracy:
Protection of intellectual property rights controls piracy. Illegal copying by unscrupulous
people is thus, stopped.

6. Encourages Creativity and Innovation:

The protection of intellectual property rights encourages creativity and innovation among the
people to go for creative pursuits as these rights help them get financial incentives.

7. Provides Wider Choice:

Protection of intellectual property rights leads to novelty in the production of goods and
services which in turn increases the range of products and services available in the market.
8. Creates Employment Opportunity:
The increase in the range of products and services, facilitated by innovations and encouraged
by the protection of intellectual property rights, increases the scope of employment
opportunities in the country.
9. Provides Security:
The protection of intellectual property rights provides security to inventors and encourages
them to invest their money, time, and labour in inventions.
 10. Promotes Technological Development:
The protection of intellectual property rights promotes technological advancement, which
makes human life easier. People can lead a happy life satisfying their latest demands.

INDIAN PATENTS ACT, 1970

Meaning of Patent:
A patent is an exclusive right to apply to an industrial invention. It is the legal right granted
by the government to an individual or inventor under Indian Patents Act, 1970 to exclude
other people from making, selling, or using the invention for a certain period. In other words,
it is an exclusive right which gives the inventor the exclusive privilege for a specified period
to own, use or sell the patented product or process. In short, it is the right which confers an
exclusive right or privilege on the inventor of a new thing or new process of manufacture for
a certain term of years to use or sell his invention. The essence of the patent system is to
encourage products, designs, or ideas that are useful to society. The person to whom the
patent is granted and whose name is entered in the Register of Patents is called 'Patentee.
Objects of Patent Law:
1. To motivate people to undertake research and innovations.
2. To encourage industrialists to introduce novel systems of production and to launch
(introduce) new products in the market.
3. To protect the interest of the inventors/patentees by giving them a monopoly power
against using the patent right.
4. To enhance the flow of inventions in society.
5. To contribute to industrial development and thereby improve the quality of life and
standard of living of the people of the country.

Characteristics/Features of Patent:
The important features of a patent are as follows:
1. Patents are regarded as intellectual property, as they are the result of purely
intellectual efforts. A person expends time, effort, and skill to produce something
new.
2. The patent must be in respect of an invention, and not a discovery
3. The patent is the exclusive right of the patentee to own. use or sell the invented
product or process.
4. The patent is the granting of a right given for a limited period. During the period of
the grant, the patentee can work the invention on a commercial scale either through a
licence or by himself.
5. There must be one patent in respect of one invention.
6. The patent must be in respect of a substance (product) or process.
7. The patent is based on claims (object of the invention).It is claims and claims alone
which constitute a patent.
8. A patent is based on the specifications (technical description of the invention) used in
the making of the invention. The claims and the specifications must be clearly and
distinctly mentioned to have a complete patent.
Kinds of Patents:
There are three different kinds of patents which are as follows:
1. Utility Patents:
Utility patents are granted to new machines, drugs, products, chemicals, and processes.

2. Design Patents:
Design patents are granted to protect the unique appearance of manufactured products.

3. Plant Patents:
Plant patents are granted to the inventions and reproduction of new and distinct plant varieties
including hybrids.

Persons who can Apply for Patents:

As per WTO rules, the following persons are entitled to claim their right to apply for
obtaining patent:
1. Inventor Himself:
Any person claiming to be the true and first inventor of the invention can file a patent. A
person, who is the first one to convert ideas and principles into a workable invention, would
be called a true first inventor.

2. Legal Representative:
The legal representative of any deceased person is entitled to make such an application. An
application can be made by any of the legal representatives either alone or jointly with any
other person.

3. Joint Inventors:
If an invention is a result of the efforts of several persons by contributing in a major way to
getting the invention materialised, then, all the persons who contributed are called joint
inventors. In this case, all the joint inventors should apply for the patent together.

4. Employer:
When an employee uses the resources of the employer the patent would belong to the
employer and the employee would assign the invention to the organisation as soon as the
invention is ready for patenting.

Term of Patent:
The term of every patent granted shall be 20 years from the date of filing of the application
for the patent. After a patent expires, the invention becomes public property and can be used
and sold by anyone.
INVENTIONS
Meaning of Invention:
According to Section 2(1) (i) of the Indian Patents Act 1970. "Invention means a new
product or process involving an inventive step and capable of industrial application".
As per this definition, to become an invention, the product or process must fulfil the
following conditions:
1. Novelty:
Novelty is the central part of a patent. In other words, the inventions must be altogether new.
Innovations that already exist cannot be patented.

2. Usefulness:
The invention must have a useful purpose and it must actually perform its intended purpose.

3. Not obvious:
The "Not obvious" requirement means that an inventive step is required. It has to be different
enough from what is already out there in the field in order to be patentable.

4. Industrial Application:
An invention must be capable of industrial application for the grant of a patent. Patent
protection is not available to purely abstract or intellectual creation. According to Section
2(1) (1) of the Patents Act, 1970, the invention comprises any new and useful.
a. Art, process, method, or manner of manufacture
b. Machine, apparatus, or other article
c. The substance produced by the manufacture So, the invention includes any new useful
improvement of any of the above items.

PROCEDURE FOR OBTAINING A PATENT

A series of steps are involved in the filing of the patent and obtaining it. The procedure for obtaining a
patent is as follows:

1. Patentability Search:
The applicant should check whether he is in a position to meet the Indian Patent Act
criteria in respect of novelty, non-obviousness, industrial application, and enabling.

2. Submitting the Patent Application:

Then inventor has to locate the appropriate patent office for filing the patent
application. The application is to be submitted by filing the prescribed patent form
along with the prescribed fee. The patent application can be submitted by the true
inventor or assignee of the inventor or legal representative of any deceased inventor.
A patent application can be submitted by any person alone or jointly with two or more
persons. The following documents are required while submitting the application:
a. Application form in duplicate (Form 1 or Form 1A)
b. The provisional or complete specification in duplicate. If the provisional
specification is filed, it must be followed by the complete specification within
12 months or 15 months with an extension (Form 2).
c. Drawing in duplicate, if necessary.
 d. Abstract of the invention in duplicate.
e. Information and undertaking listing the number, filing date, and current status
of each foreign patent application in duplicate (Form 3).
f. Priority document (if another date is claimed) in convention application.
g. Declaration of inventorship where the provisional specification is followed by
complete specification or in case of convention application (Form 5).
h. Power of attorney (legal authorisation), if filed through the patent agent.
i. The fee to be paid in cash or by cheque or by demand draft payable to the
Controller of Patents drawn on any scheduled bank at a place where the
appropriate office is situated.

3. Examination of Patent Application:

The patent examiner appointed by the Controller of Patents conducts a 'strategic
search' with three checks in the application submitted. Firstly, he checks whether the
patent application fulfills all the requirements of the Patent Act and Rules and filled in
properly with necessary details. Secondly, he checks the legal ground of objection to
the filed patent. Finally, he checks whether the invitation has already been published
or claimed by any other person. If it is found by the examiner that the application
claims are already published in any of the national or international journals, the
application submitted will be rejected and the applicant may not be granted a patent.

4. Responding to Objection:
If during the strategic search, some similarities or objections are found, it is
communicated to the applicant for further clarification. The applicant has to give a
satisfactory reply or suggest changes required to the satisfaction of the Controller
within 15 months of raising the objection. If no objection is found at the strategic
search or the applicant satisfactorily answers to all the objections, the Controller
accepts the patent application along with a complete specification for the next stage.

5. Publication of Application:
After the acceptance of the application by the Controller, the patent application should
be published/advertised in an official Gazette. The main reason for the publication of
the invention is that everyone comes to know about the particular patent and its claim;
and if anyone has an objection regarding it, they may file an opposition to it in the
Patent Office. This is known as pre-grant opposition. Such an opposition must be filed
within four months of the publication and the inventor must reply for the same within
one month. The following are the ground for opposition (Section 25):

a. The applicant has wrongfully obtained the invention.

b. The invention claimed has been published before the filing date of the patent
application.
c. The invention has already been claimed by another applicant before the
inventor's application.
d. The invention is publicly known or publicly used in India before the
applicant's claim.
e. The invention as claimed by the applicant is obvious and does not involve any
inventive step.
f. The applicant has not disclosed sufficient information of given false
information in the complete specification
 The Controller after hearing the parties takes a decision. If either party is not satisfied
with the order of the Controller of Patent, the aggrieved party may appeal to the
Intellectual Property Appellate Board, Chennai against the order.

6. Grant of Patent:
In case the applicant is able to fulfil all the patentability criteria, the Controller would
approve the application, and then the patent is granted to the applicant under the seal
of the Patent Office. The details of the patent along with the date on which it is sealed
will be entered in the Register of the Patent Office. This register is a significant legal
document in case of a patent dispute. The patent approval would be published in the
patent journal.

RIGHTS AND DUTIES OF A PATENTEE

Rights of a Patentee:
A patent gives the patentee a monopoly right for a fixed term, subject to certain
conditions and obligations. The following are the various rights enjoyed by the
patentee:

1. Right to Exploit Patent:

According to Section 4 of the Act, a patentee or his licensee, assignee or agent has the
right to exploit the patent. They can make commercial use of the patented invention.
However, Section 7 of the Act empowers the government to import or use the patent
product for its own use.

2. Right to Grant Licence:

If a patentee is unable or unwilling to exploit the patent himself, he can grant licence
to a third person and authorise such a person to use the patent for consideration, i.e.,
royalty.

3. Right to Assign the Patent:

A patentee is also empowered to fully or partially assign his patent to another person
through sale, gift, or any other mode.

4. Right to Surrender the Patent:

A patentee, if decides, can surrender his patent at any time by giving a notice in the
prescribed manner.

5. Right to get Duplicate Patent:

The patentee has the right to get a duplicate patent on the production of satisfactory
documents to the Controller when the original patent is lost or destroyed

6. Rights against Infringement:

The patentee has the right to prevent unauthorised dealers from using the patent
without his permission. He can also seek legal remedies including a civil suit against
infringement.
Duties/Obligations of a Patentee:
A patentee has the following obligations to get the patent from the Controller:
1. Duty to Work Out Patent and make it Available to the Public:
It is the duty of the patentee to work the patent in India in such a manner that the
reasonable requirements of the public concerning the patented invention are satisfied
and the products of the invention are made available to the public at a reasonable
price. It is also essential that the monopoly power created by the patent should not be
used against the public interest. If the patent is not used the government, may revoke
the patent granted to the patentee.

2. Duty to Furnish Information:

The patentee while applying for a patent right, is also required to give the necessary
information required by the Controller. If he fails to do so, he is liable for a penalty of
up to 10 lakhs.

FOREIGN EXCHANGE MANAGEMENT ACT (FEMA), 1999

Introduction:
The Foreign Exchange Management Act, 1999 (FEMA) is passed in the Parliament of
India to consolidate and amend the law relating to foreign exchange, to facilitate
foreign trade and promote the orderly development and maintenance of the forex
(foreign exchange) market in India. FEMA replaced the Foreign Exchange Regulation
Act, 1974 (FERA) since FERA became redundant (useless) with pro-liberalisation
policies pursued by the Government of India after globalisation. The enactment of
FEMA was proposed by the Reserve Bank of India in 1999 and FEMA came into
force on 1 June, 2000. The main idea behind the enactment of FEMA was to
overcome all the limitations of FERA and hence, major economic reforms were
introduced under this new Act. Further, it was primarily enacted to do away with the
rigid restrictions which were there on foreign trade and have a liberal Indian
economy.

FEMA is a regulatory mechanism which empowers the Reserve Bank of

India to pass regulations and the Central Government of India to frame rules relating
to foreign exchange as per our country's foreign trade policy. It describes the
procedures, formalities, and dealings of all foreign exchange transactions in India. It
empowers the Central Government to impose restrictions on transactions like making
payments to persons living abroad or receiving money from them. It enabled a new
foreign exchange management regime which is consistent with the emerging
framework of the World Trade Organisation. It is also responsible for the introduction
of the Prevention of Money Laundering Act. 2002 which came into effect on 1 July,
2005. The new Act applies to the whole of India and offices owned and managed by
Indian citizens located abroad. Its head office is located in New Delhi and it is known
as Enforcement Directorate (ED).

Objectives of FEMA:
The main objectives of FEMA entail:
1. To facilitate foreign trade and payments in India.
2. To encourage and promote orderly development and maintenance of the forex
market in India.
3. To define procedures, formalities, and dealings of all foreign exchange transactions
in India. These include Current Account transactions and Capital Account
transactions.
4. To utilise foreign exchange resources efficiently and effectively.

Salient Features of FEMA:

The following are the salient features of FEMA, 1999;

1. It gives powers to the Central Government of India to regulate the flow of

payments to and from a person residing outside India.

2. All financial transactions concerning foreign securities or exchanges cannot be

carried out without the prior approval of FEMA. Such transactions could be
carried out through "authorised dealers" only.

3. In the general interest of the public, the Government of India can restrict an
authorised dealer from carrying out foreign exchange dealings within Current
Account.

4. It empowers the Reserve Bank of India to place restrictions on transactions from

Capital Account even if it is carried out through an authorised dealer.

5. As per this Act, Indian citizens residing in India, have the permission to deal in
foreign exchange/security transactions or the right to hold and own immovable
property in a foreign country.

Meaning of Foreign Exchange:

Foreign exchange means foreign currency. Foreign currency means any currency
other than Indian currency. Foreign exchange includes -
1. Deposits, credits, and balances payable in any foreign currency.
2. Drafts, travellers' cheques, letters of credit, or bills of exchange, expressed or
drawn in Indian currency but payable in any foreign currency.
3. Drafts, travellers' cheques, letters of credit, or bills of exchange drawn by banks,
institutions, or persons outside India, but payable in Indian currency. Foreign
Exchange, would thus, include transactions drawn in Indian currency in India but
payable in foreign currency or transactions drawn outside India but payable in Indian
currency.

Meaning of Indian Currency:

Indian currency means the currency which is expressed or drawn in Indian rupees but
does not include special notes and special one-rupee notes issued under Section 28A
of the Reserve Bank of India, 1934.
Currency includes all currency notes, postal notes, postal orders, money
orders, cheques, drafts, travellers' cheques, letters of credit, bills of exchange and
promissory notes, credit cards, or such other similar instruments, as may be notified
by the Reserve Bank of India. Currency note means and includes cash in the form of
coins and banknotes.
Meaning of Security:
Security means shares, bonds, and debentures. Government securities as defined in
the Public Debenture Act, 1944, savings certificates to which the Government
Savings Certificates Act, 1959 applies, deposit receipts in respect of deposits in
securities and units of Unit Trust of India established under Section 3(1) of the Unit
Trust of India Act, 1963 or of any mutual fund and includes certificates of title to
securities but does not include bills of exchange or promissory notes other than
government promissory notes or any other instruments which may be notified by the
Reserve Bank of India as security.

Meaning of Foreign Security:

Foreign Security means any security, in the form of shares, stocks, bonds, debentures,
or any other instrument denominated or expressed in foreign currency and includes
securities expressed in foreign currency, but where redemption or any form of return
such as interest or dividends payable in Indian currency.

AUTHORISED DEALER
Authorised dealer as per Foreign Exchange Management Act means an authorised
dealer, money changer, offshore banking unit, or any other person for the time being
authorised to deal in foreign exchange or foreign securities.
The Reserve Bank of India may, on an application made to it, authorise any
person to be known as authorised dealer to deal in foreign exchange or foreign
securities. as an authorised dealer, money changer, or offshore banking unit, or in any
other manner as it deems fit. Thus, an authorised dealer can now deal in foreign
securities apart from foreign exchange. An offshore banking unit is also now
considered as an authorised dealer.

Penalty for Violation of FEMA Rules:

In case there is a violation of the provisions of FEMA the Enforcement Directorate is
empowered to impose a penalty three times the size of the contravention involved
where the sum is quantifiable. However, if the contravention is unquantifiable, the
penalty levied is 2 lakhs. Furthermore, where the violation is continuing. an additional
penalty of Rs. 5,000 per day can be collected for contravention

Restrictions on Dealing in and Holding of Forex:

According to Sections 3 and 4 of FEMA, no person shall-
1. Deal in or transfer any foreign exchange or foreign security to any person not
being an authorised dealer.
2. Make any payment to or for the credit of any person resident outside India in any
manner.
3. Receive otherwise through an authorised dealer, any payment by order or on
behalf of any person resident outside India in any manner. Where any person
resident in India receives any payment by order or on behalf of any person
resident outside India through any other person (including an authorised dealer)
without a corresponding inward remittance from any place outside India, then,
such person shall be deemed to have received such payment otherwise than
through an authorised dealer.
4. Enter into any financial transaction in India as consideration for or in association
with the acquisition or creation or transfer of a right to acquire, any asset outside
India by any person. Financial transaction for. by order, or on behalf of any
 person, drawing, issuing, or negotiating any bill of exchange or promissory note
or transferring any security or acknowledging any debt. Any payment received
through any person or an authorised dealer from outside India has to be supported
by a foreign inward remittance. These restrictions are intended to prevent money
laundering or hawala transactions.

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Important questions

2 marks
1. Who is an authorised dealer?
2. What is meant by currency?
3. What is foreign currency?
4. What is foreign exchange?
5. What is foreign security?
6. Write the objectives of FEMA 1999.

5 marks

1. Scope of intellectual property rights.

2. Explain the salient features of FEMA 1999.

15 marks

1. What is intellectual property? Explain the scope and objectives of IPR.

2. Explain the procedure to get patent in India.