Counterfeiting is the passing off action of the genuine products to customers. Such products are sold under the famous establishing and manufacturing. This is nothing but the cheating consumer and running parallel operation. Intellectual Property Rights (IPRs) come in hand of passing off action. The statute governing IPRs recognizing such activity as an offence and provide for stringent punishment such as counterfeiting activity. Counterfeiting activity remind us the large scale of counterfeiting in currency. Reserve Bank of India with the help of the statutory provision catches such offenders and brings them to prosecution under the Panel provision.

1. 2.    COUNTERFEITING : HOW IT IS DONE

Counterfeit products may include[i]

i)                    products with correct ingredients, but containing insufficient or erroneous   quantities of active ingredients, or expired active ingredients either to save cost or owing to poor quality control factors;

ii)                  wrong ingredients with possibly toxic elements and impurities and therefore directly harmful to patients;

iii)                without active ingredients or using similar class of cheaper ingredients to escape detection; 

iv)                produced by unhygienic manufacture, or lack of rigorous cleaning between production batches; or

v)                  products with false or misleading packaging.

The Standard of Weight and measure (packaged Commodities) Rules 1977 were enacted to regulates the use of correct weighing and measuring instruments in production, trade and commerce to ensure that exact weight, measure and number of any commodity is provided to any customer as contracted for. It also protects the consumers’ benefits by assuring compulsory declarations on packaged commodities. The Standards of Weights &Measures Act 1956 was the first Act which enacted based on metric system and international system of units recognized by OIML – International Organization of legal metrology in order to provide uniform standards of Weights & Measures.

The Rules have tried to make the manufacturer and traders to be responsible for producing and importing the commodities. Every package kept, offered for sale or sold, shall bear conspicuously on it, the name and complete address of the manufacturer, or where the manufacturer is not the packer, the name and address of the manufacturer and the packer and in case of imported packages, the name and address of the importer. The complete and clear address shall mean the postal address at which the registered office of the manufacturer is situated or the factory is situated so that a consumer can identify and locate the manufacturer or packer.

In case any products manufactured outside India but packed in India, the package shall also display the complete name and complete address of the packer or the importer in India. The name of the manufacturer or packer or importer shall be the actual corporate name, or if not incorporated, the name under which the business is conducted by such manufacturer or packer or importer in India. Also the rules further restrict the application of individual stickers or labels on the package for altering or making any declaration as may be required under the Rules.

COUNTERFEITING IN PHARMACEUTICAL INDUSTRY

At the moment the WHO definition reads as follows:

“A counterfeit medicine is one which is deliberately and fraudulently mislabeled with respect to identity and/or source. Counterfeiting can apply to both branded and generic products and counterfeit products may include products with the correct ingredients or with the wrong ingredients, without active ingredients, with insufficient (inadequate quantities of) active ingredient(s) or with fake packaging.“

A counterfeit drug or a counterfeit medicine is a medication or pharmaceutical product which is produced and sold with the intent to deceptively represent its origin, authenticity or effectiveness at least to some level. Some examples of types of counterfeit drugs include:

1 On the products’ labels the specified active ingredients has not been contained as such as it is declared.

2 The active ingredient which has shown on the labels is different from what is contained in the product itself.

3 Products which contain the correct strength of the specified active ingredients but whose source is different to the one declared.

4 Products which contain the specified active ingredients but in strengths different to those declared; they may also contain different or different quantities of impurities.

Counterfeit medicines are part of the broader phenomenon of substandard pharmaceuticals. Substandard medicines are those products which the composition and ingredients do not meet the correct scientific specifications and which are thus ineffective and causing dangerous to the patients. There are many reasons to make the substandard products may occur as a result of negligence, human error, insufficient human and financial resources or counterfeiting. The difference is that they are deliberately and fraudulently mislabeled with respect to identity and/or source. Counterfeiting can apply to both branded and generic products and counterfeit medicines may include products with the correct ingredients but fake packaging, with the wrong ingredients, without active ingredients or with insufficient active ingredients. A Spurious drug may or may not have ingredients with therapeutic use while Counterfeit drug may comply with quality standard while imitating popular brands.

According to Dr BR Jagashetty, Karnataka Drugs Controller Currently, there is no definition for counterfeit drugs as far as India is concerned. However, the Drugs & Cosmetics Act only carries definitions of spurious, misbranded and adulterated drugs under Section 17 for the domestic market and Section 9 for imports. However there is still the ambiguity on the definition of adulterated and spurious,

The market circle of counterfeit medicines has made the huge profitable business due to high demand and low production costs. The lack of the stringent legislation in many countries also encourages counterfeiters since there is no fear of being apprehended and prosecuted. When prices of medicines are high and price differentials between identical products exist there is a greater motivating for the consumer to seek medicines outside the normal supply system.

COPYRIGHT INFRINGEMENT ON SOFTWARE

Form of Piracy[ii]

Software piracy is defined as an act of unauthorized copying or loading or distribution of copyrighted software in violation of the end user of the end user license agreement. There are four forms of software piracy; end user piracy, counterfeiting, channel piracy, internet piracy.

-         End user piracy means an end user such as an organization, company, or educational institution uses entirely unlicensed software or software in excess of the licensed purchase.

-         Counterfeiting means it involves the making of the exact replicas of the CDs or DVDs of the original software along with holograms, trademarks, packaging, instruction manuals, and certificate of authenticity. The price of the counterfeit products mostly cheaper than the original one.

-         Channel piracy involves the sale of loose CDs or DVDs on which software program has been burnt. These CDs or DVDs are not lookalikes of the original software CDs; neither are they accompanied by an end user license agreement or a certificate of the authenticity. They are sold at a price which is considerably lower than the original software price.

-         Internet piracy the Internet is used as a means to sell, distribute and advertised unlicensed software programs. This can be done in a number of ways such as through bulletin boards, auction sites, peer to peer networks, blogs and other commercial website.

Counterfeiting includes producing the duplicates of the original CDs or DVDs of the original, along with holograms, trademarks, packaging, instruction manuals and certificates of authenticity. The counterfeit product can be bought by the consumers at a lower price than the original product itself. To give the clarification on what can be called as infringement; Section 51 of the Copyright Act contemplates the various acts that amount to infringement of copyright vested with the owner. Also Section 53 restricts the importation of copies which would infringe copyright.

INFRINGEMENT UNDER TRADEMARK LAW

If we look into the provisions under Indian Trademark Act, 1999, under Section 29 has provided the definition of the infringement, however, there is nowhere in the Act which has referred to the definition of the counterfeit. Nevertheless if we look into US Trademark Act, it has been mentioned the definition of both the infringement and counterfeit and from that we can come to know the difference between the “counterfeit” and “infringement”. All counterfeit marks are infringing.  Infringing marks also include a broader class of marks that are “confusingly similar” to genuine marks while counterfeit marks include marks that are “substantially indistinguishable” from a genuine mark, this definition contemplates only minor or trivial differences from the genuine mark.  The “confusingly similar” test for infringing marks contemplates wider differences.

Counterfeit goods has been defined that without authorization of the trademark right’s holder the products, packaging has been imitated which cannot be distinguished the essential feature of the goods itself from the genuine one. Counterfeit goods also include packaging materials, stickers, brochures and instructions even though these are presented separately from the goods themselves.

PATENT INFRINGEMENT

Under Patent law regime, a patentee has been conferred the exclusive right to make, distribute or sell the invention in India. An infringement would be happened when any of those rights are violated. A patentee may assign license all or some of these rights and it will not amount o infringement if the assignee or licensee exercise such patent rights. In case of a product patents rights of the patentee are infringed by anyone who makes or supplies that substance commercially. In case of a process patent, the use of such a method or process in India by anyone other than the patentee amounts to infringement.

To consider whether anyone other than the patentee has done which amounts to infringement or not would depend upon:

v  The extent of the monopoly right conferred by the patent which is interpreted from the specification and claims contained in the application of the patentee. Any action which falls outside the scope of the claims would not amount to infringement.

v  Whether he is infringing any of the monopoly rights in the patentee to make, or sell the invention.

1. 3.    REMEDIES AVAILABLE UNDER INTELLECTUAL PROPERTY RIGHTs

Remedies available to Copyright

CIVIL ACTION: When some person has evidence to prove that his copyright has been infringed, he can bring a civil action against person responsible for such infringement, for compensation and other remedies. Under Section 55 the remedies can be damages to compensate the loss due to infringement or/and injunction prohibiting person infringing from continuing to infringe the copyright.

CRIMINAL ACTION: Some infringements are criminal offences also. As far as computer software is concerned, it is an offence in many countries to make an infringing copy to sell and also to advertise the supply of such programme. Section 64 empowers the police to seize all counterfeit software copies, while Section 63 provides for imprisonment of up to three years and fines of up to Rs200, 000 in case of infringement or abatement. Hence people indulging in software privacy are available for both civil and criminal actions[iii].

Also Section 11 of the Customs Act empowers the customs officials to prohibit the importation and exportation of goods in order to protect copyrights and trademarks. In addition, a new customs recordal system has been introduced through the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007 to strengthen border enforcement with the objective of preventing the entry of counterfeit goods into the country.

Remedies available to trademark

The Trademarks Act provides remedies not only for the infringement of a registered trademark but also gives remedy of passing off to protect against infringement of an unregistered trademark. Section 27(2) recognizes the common law remedy of passing off against any person dealing in counterfeit goods. Section 29 mentions the definition of infringement of a registered trademark which includes unauthorized use by a person of a mark which because of its identity or similarity with the registered trademark and use in respect of identical or similar goods is likely to cause confusion on the part public or which is likely to have an association with the registered trademark. Section 135 provides for civil remedies in case of either infringement or passing off. These remedies include injunction, damages, delivery up and rendition of accounts.

Under Trademark Act, 1999 has defined counterfeiting in terms of “falsification” and “false application” of a trademark. According to Section 102 of the Act, “a person shall be deemed to falsify the trademark who either makes that trademark or a deceptive similar mark, or falsifies any genuine trademark, by alteration, addition, effacement or otherwise”. Similarly false application of trademark on goods or packages containing goods, other than genuine goods and including use of any package bearing the said trademark for packing, filling or wrapping, spurious goods. Section 103 provides for criminal remedies such as imprisonment of up to three years and fines of up to Rs200, 000 (around $5,000) in case of counterfeiting. Counterfeit in India is cognizable offence. The occurrence or likelihood of occurrence of an offence can be directly reported to a police officer not below the rank of Deputy Superintendent or to the Intellectual Property Cells of police in cities like Delhi, Mumbai, Kolkata, and Bangalore[iv].

Remedies available to Patent

Under the Indian Patent Act, the right of the patentee has been protected. If the monopoly rights of the patentee are violated, his rights are secured by the Act through judicial intervention. The patentee has to institute a suit for infringement. The relief’s which may be awarded in such a suit are Interlocutory/ interim injunction, Damages or account of profits, Permanent injunction.

Section 104 of the Act provides that a suit for infringement shall not be instituted in any court inferior to a District Court having jurisdiction to try the suit. In appropriate cases where the High Court has original jurisdiction to try the suit, the suit shall be instituted in the High Court when an action for infringement has been instituted in a District Court and the defendants make a counter claim for revocation of the patents, the suit is transferred to the High Court for decision because High Court has the jurisdiction to try cases of revocation. Section 104A provides for burden of proof in case of suits concerning infringement. The procedure followed in conducting a suit for infringement is governed by the provisions of code of civil procedure[v].

Only the person who has a right in the patent can institute a suit for infringement. The following persons are entitled to sue:-

(1) The patentee.

(2) The exclusive licensee if the license is registered.

(3) A compulsory licensee when the patentee refuses or neglects to institute proceedings.

(4) A licensee other than the above two licensees can bring an action for infringement upon the terms of the contract between the licensor and licensee.

(5) Assignee, he can sue only after the application for registration of the assignment in his favour has been filed. If a patent is assigned after the commencement of action, the assignee is to be joined as a co-plaintiff. An assignee cannot sue for infringement which occurred prior to assignment.

A suit for infringement can be instituted only after the patent has been sealed. When a specification has been accepted and published i.e., during the period when opposition has been called and is being decided, the applicants cannot institute a suit for infringement. However the damages maintained due to the infringement, committed during the period i.e., between the date of publication of acceptance of complete specification and the date of grant may be claimed in another suit; a separate suit for damages but not suit for infringement. Also a suit can be instituted during the term of even after the expiry of the term even when the term of the patent has expired and infringement occurred during the term of such patent, In case a patent had lapsed and was subsequently restored, committed between the date on which the patent ceased to have effect and the date of publication of application for restoration. When a patent was obtained wrongfully by a person and later granted to the true and first Inventor, no suit for infringement can be instituted for any infringement occurring before the period of such grant to the true and first inventor. Court will issue the notice to the defendant (infringer) so there is no need as such for a person who institutes as such to give the notice to the infringer. Moreover the period a limitation for instituting a suit for patent infringement is three years from the date of infringement.

1. 4.    INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHT WITH THE CUSTOMS ACT, 1962 AND PROCEDURE UNDER INTELLECTUAL PROPERTY RIGHTS (IMPORTED GOODS) ENFORCEMENT RULE, 2007

Customs Act, 1962 prohibits import of goods that infringe intellectual property. Section 11 of the Act empowers the Central Government, for the purposes specified in subsection 11(2), to prohibit import or export of goods of any description by issuing a notification. Section 11(2) (n) read with Section 11(1) of the Act empowers the Central Government to prohibit import or export of goods for the protection of patents, trademarks and copyrights. Section 11(2) (u) covers prohibition for the prevention of the contravention of any law for the time being in force. Section 111 and 113 of the Act empowers the Customs to confiscate improperly imported and exported goods respectively.

There have been attempts in the past by the Central Government to issue notifications under Section 11 of the Act and prohibit import of goods that infringe intellectual property. The Central Government issued a notification in 1960 prohibiting export – through sea and land – of goods that attract Section 78 and 117 of the Trade Marks Act, 1968. Another notification was issued in 1964 which prohibited goods bearing false trade mark, false trade description and goods passing off a trademark.

On May 8, 2007, the Central Government vide Notification No. 49/2007-Customs (N.T.), prohibited the import of the following goods, subject to conditions and procedures as specified in the Intellectual Property Rights (Imported Goods) Enforcement Rules,2007, namely[vi]:-

1. goods having applied thereto a false trade mark as specified in Section 102 of the Trade Marks Act, 1999;
2. goods having applied thereto a false trade description within the meaning of clause (i) of sub-section (1) of Section 2 of the Trade Marks Act, 1999;
3. goods made or produced beyond the limits of India and intended for sale, and having applied thereto a design in which copyright exists under the Designs Act, 2000;
4. the product made or produced beyond the limits of India and intended for sale for which a patent is in force under the Patents Act,1970;
5. the product obtained directly by the process made or produced beyond the limits of India and intended for sale, where patent for such process is in force under the Patents Act 1970;
6. goods having applied thereto a false Geographical Indication within the meaning of Section 38 of Geographical Indications of Goods (Registration and Protection) Act, 1999;
7. goods which are prohibited to be imported by issuance of an order issued by Registrar of Copyrights under Section 53 of the Copyright Act,1957.

The Central Government also notified ‘Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007′ on the same date. The rules were notified with a view to strengthen the statutory and executive guidelines provided for the protection of intellectual property rights at the borders.

Under the rules, an intellectual property right holder may give notice in writing to the Commissioner of Customs or any Customs officer authorized in this behalf by the Commissioner, requesting for suspension of clearance of goods suspected to be infringing intellectual property rights. Such notice shall be given in the format prescribed in the Annexure to the Rules and all the information required in the notice should be furnished within 15 days.

Such notice should be registered or rejected within 30 working days of the date of receipt of the notice or date of expiry of extended 15 days period provided for furnishing information required to be filed with the notice. In case the notice is registered, the minimum validity period shall be one year unless the noticee or right holder requests for a shorter period for customs assistance or action. The grant of registration of the notice is subject to following measures[vii]:

v  Customs Department can ex-officio suspends the clearance of the alleged counterfeit goods or on notice if the department has prima-facie evidence or reasonable grounds to believe the goods to be counterfeit. 

v  Customs Department is under duty to inform the right holder immediately about suspension of clearance of goods with the reasons for such suspension.

v  Goods suspended of clearance, is to be released, on 

• Notice  within 10 days (extendable further with 10 days), when the right holder fails to join proceedings
• Department’s own initiative within 5 days, when the right holder fails to give notice or fails to fulfill the obligation of executing bond.

v  Period of suspension of release of perishable goods is 3 days. 

v  Department is authorized to seize and confiscate the goods infringing intellectual property rights where it has reasons to believe that the goods are infringing intellectual property and thus liable to be confiscated under the Customs Act.

v  Customs is under duty, upon request by the importer, to provide the name and address of the right-holder and other relevant information relating to the goods suspended from clearance.

v  The right holder is under an obligation to provide customs authorities with the necessary information enabling them to identify infringing goods. The Custom authorities then seek information from the importer, of the person by whom the goods are consigned to India and the address of the person whom the goods are sent in India as well as ask him to produce documents relating to the goods. 

v  Right holder is authorized to examine the suspended goods and to provide samples for examination and analysis to determine whether the goods infringe intellectual property rights.

v  Customs department is to provide, upon request by the right holder, name and address of the importer and other relevant information relating to the goods suspended from clearance.

If the Deputy/Assistant Commissioner of Customs has a reason to believe that the imported goods are suspected to be goods infringing intellectual property rights, Custom Authorities can suspend clearance of suspected goods. Thereafter, the Deputy/Assistant Commissioner of Customs shall immediately inform the importer and the right holder of the suspension of clearance of the goods and shall also mention the reasons for such suspension. However the suspension goods can be released if the right holders fail to join the proceedings within a period of ten working days (extendable by another 10 days) from the date of suspension of clearance. In case the clearance of goods was suspended on Customs own initiative, such goods shall be released within five working days from the date of suspension of clearance, if the right holder fails to give notice or fails to execute the bond. In case of perishable goods, the period of suspension of release is three working days, extendable by another four days.

In case the Deputy/Assistant Commissioner of Customs determines that the goods detained or seized have infringed intellectual property rights, and have been confiscated under section 111 (d) of the Customs Act, 1962, he shall destroy such goods under official supervision or dispose them outside the normal channels of commerce after obtaining ‘no objection’ or concurrence of the right holder. The right holder can raise objection on the mode of disposal within 20 working days (extendable by another 20 days) after having been informed so.

1. 5.    CONCLUSION

The counterfeiting products have affected not only on the loss of the right holder/owner in the market but also the economics of the nation. The Government should develop the regulation and enforcement to control such counterfeit commodities extensively spread out to the market. So for that the strict measures and stringent action to eradicate the counterfeit products is very significance. In addition not only the strict measure taken by the authority to eliminate such counterfeiting products is necessary but also the cooperation from the right holders or owners of such products is important to stop spreading and eliminate such counterfeit products both internal and external markets.

[ii] www.WorldTrademarkReview.com

[iii] Dr. Firdos T. Shroff, Intellectual Property Rights (IPRs) – A Gateway to Corporate Globalisation, SEBI and Corporate Law, Vol. 89, 2009.

[iv] Ramesh Babu and Abhai Pandey, Better For Brands to Work Together, India IP Focus, 2008.

[v] Article on Patent Infringement Law in India by K.R. Singh.

[vi] Article by Jayant Kumar, India: Enforcement of Intellectual Property Rights through Customs, 2 June 2009.

[vii] INDIA IPR CUSTOM & BORDER PROTECTION, Altacit Global, 2008.

The Indian law on this subject is contained in the Patents Act, 1970 (a law made by the Indian Parliament) as amended from time to time. In pharmaceutical industry what is patentable is an invention for making a product, and not a discovery in the field of fundamental science. In a discovery nothing new is created. On the other hand, an invention is creation of a new entity, or a new process, though this usually involves utilization of scientific discoveries. The basic requirement for patentability under the Patents law is that the invention should be new and useful, that is, it must have novelty and utility, vide Bishwanath Prasad Radhey Shyam v.Hindustan Metal Industries Once an invention is patented the patentee gets exclusive right to use it, though he may sell or lease it to another. Infringement of the patent can be prevented by an injunction in a civil suit.

TRIPs, the Agreement on Trade-Related Aspects of Intellectual Property Rights is an International treaty by the World Trade Organization (WTO) which sets down minimum standards for most forms of intellectual property (IP) regulation within all member countries of the World Trade Organization. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) treaty in 1994. After India signed the General Agreement on Trade and Tariff (GATT) and the Trade Related Aspects of Intellectual Property Rights Agreement, 1994 (TRIPS) and became a member of the World Trade Organization (WTO). As India is a signatory to the TRIPS Agreement and is a member of WTO, the Patents Act is amended in 2005 to make it confirm to these international agreements. Under Article 70(8)(9) of the TRIPS Agreement regarding pharmaceutical industry, India has the following obligations:

(a) To recognize in principle all kinds of inventions in the area of pharmaceutical and agricultural chemical products in accordance with Article 27 of the Agreement.

(b) To provide a mechanism by which applications can be filed for new inventions as understood in Article 27 in these areas from 1-1-1995.

(c) To apply the test of patentability as laid down in the Agreement irrespective of the law of the country on the date of filing, at the time when patent is granted or rejected.

(d) To provide patent protection for a period of 20 years, from the date of filing once the parties decide to grant the patent.

(e) In the case of product patent applications in these areas, grant exclusive marketing rights for five years or until patent is granted or rejected, whichever period is shorter.

Granting of exclusive marketing rights is subject to three conditions:

(i) product patent for the invention has been granted by another member country;

(ii) market approval is obtained in such other member country; and

(iii) market approval from the country/member granting exclusive marketing right is granted.

Before the recent amendment Section 5 of the Indian Patents Act, 1970 Expressly prohibited product patents and only permitted process patent. After the implementation of TRIPS, the Patents (Amendment)Act, 2005 repealed it and therefore gave way to product patents as well. The difference between process patent and product patent is that under a process patent, medicine or drugs which have been patented can be manufactured by another manufacturer but by using a different process. However, in a product patent drugs which have been patented cannot be manufactured by any process. Thus, product patent is a much stringent restriction than process patent. In consequence of India signing the TRIPS Agreement and WTO India accepted the product patent from 1-1-2005 in accordance with the obligation under Article 27(1) of the TRIPS. It is open to a country signing the TRIPS Agreement to exclude from patentability inventions which are necessary to protect morality, order or health or avoid serious prejudice to the environment, but such exclusion can only be in areas where the majority of member States are also prohibiting the commercial exploitation and denying protection.

The implementation of the TRIPS Agreement will give rise to factors that can put access to medicines out of reach for millions of people in the developing world. The TRIPS Agreement obliges WTO Members to adopt and enforce high standards of intellectual property rights protection, which were derived from the standards used in developed countries. Conforming to TRIPS – by recognizing and strengthening protection of intellectual property rights over pharmaceutical products and processes – will cause problems for developing countries. Implementation of the TRIPS Agreement may lead to high drug prices, low access to medicines and a weakening of pharmaceutical industries in the developing countries. It is feared that patent protection for pharmaceutical products and processes will have the effect of reducing or eliminating competition from generic production of medicines. There are about 10 industrialised countries with the pharmaceutical industry and research base, capable of developing new chemical entities or new medicines. The multinational drug companies in these countries own most of the pharmaceutical technologies and products through patents. The minimum term of 20-year patent protection required by TRIPS effectively allows a pharmaceutical company a monopoly over the production, marketing and pricing of patent protected medicines. It will be able to keep the price of the drug high during the protection period, free from competition. By virtue of TRIPS protection, no generic equivalent can come into the market until expiry of the 20 years, denying patients cheaper alternatives. Domestic manufacturing of pharmaceutical products in developing countries will come to a standstill. Developing countries are able to produce new medicines by a process of reverse engineering; that is, researchers in developing countries may develop a new process different from the process invented (and protected by patent) to manufacture the new medicine or chemical entity. Reverse engineering is possible only in countries where the patent law protects processes but not products. The TRIPS Agreement extends the scope of patent protection to both products processes. It would therefore be possible to apply for patent rights over products for 20 years, and thereafter, further periods of 20 years each could be applied for products covered by patented processes. Developing country pharmaceutical producers will find themselves pushed out of the market, having to compete with the large MNCs. For the smaller producers in the developing world, which specialise and depend on manufacturing cheaper generic alternatives, this would no longer be possible at least, until the expiry of the 20-year period. The TRIPS Agreement further requires patents to be granted, regardless whether the products are imported or locally produced. The means that patent holders can merely import their product, without having to work the patent in the country granting the right. This will mean that a MNC can supply global markets under the patent monopoly, exporting the finished product instead of transferring technology or making foreign direct investment. This is contradictory of the argument of TRIPS proponents that strict patent regimes will increase the flow of technology and investment into developing countries. The TRIPS Agreement, in its present form, contains certain provisions that can be used to limit patent rights. These limitations or exceptions are to be effected through national legislation, in order to curb abuses of intellectual property rights and anti-competitive practices, and generally, to offset the negative impact of patent monopolies. Two of the most important measures include the right of government to grant compulsory licenses and the application of the principle of exhaustion of intellectual property rights, which allows for parallel importation of patented products.

National Pharmaceutical Policy, 2006 Announced

The National Pharmaceutical Policy, 2006 has been announced, it is focusing on research and drug development with clinical trials. The policy lays emphasis on developing human resources in pharmaceutical sciences by opening more institutions on the pattern of the National Institute of Pharmaceutical Education and Research (NIPER). The policy aims at providing a better access to anti-cancer and anti-HIV/AIDS drugs to the patients.

Hon,ble Minister Shri Paswan said the draft National Pharmaceutical Policy, 2006 seeks to rationalise the excise duty on pharmaceuticals. It also seeks to streamline the system of bulk procurement of drugs by the Government besides promoting the generic medicines. The Minister said consumer awareness campaigns would be launched to educate the masses on the new policy. Drugs would be made available to the poor, especially the families living below the poverty line. He said the new policy encourages production of critical bulk drugs in India with emphasis on good manufacturing practices. There would be a Settlement Commission for settling old dues under the Drugs (Prices Control) Order, 1979. A Drug Price Monitoring Awareness and Accessibility Fund (DPMAA Fund) would be set up along with pharma parks. Shri Paswan said the policy lays greater thrust on pharma exports and on improving the retail system for an efficient network for distributing drugs. A Pharmaceutical Advisory Forum would be set up at the national level besides an advisory committee in the National Pharmaceutical Pricing Authority(NPPA) at its head office and five in different regions. These would be headed by the NPPA Chairman.

In addition to the existing 74 drugs and their formulations, the 354 drugs with specified strength as mentioned in the National List of Essential Medicines (NLEM), 2003 have also been included in the draft Pharmaceutical Policy. Apart from the cost plus method, other systems of price control like negotiated prices, differential prices, reference prices and bulk purchase price have also been proposed. He said the raw material cost would be obtained from the manufacturers, central public enterprises in the pharmaceutical sector, import data and market sources.

Govt. disclosed that the Maximum Allowable Post-manufacturing Expenses (MAPE), presently 100 per cent over the manufacturing cost, is proposed to be revised as follows:

(a) 150% in general

(b) 50% additional MAPE for R&D intensive companies which fulfill the laid down standards.

(c) For existing 74 drugs under price control MAPE would continue to remain at 100% for one year in order to avoid a sudden increase in prices. It would be increased thereafter on the above pattern.

(d) Based on the given percentage of MAPE, prices would be fixed for all drugs in the cost plus price control system. Wherever possible ceiling prices would be fixed.

(e) Maximum Retail Price (MRP) would be inclusive of all taxes as in the case of all other packaged commodities.

(f) Some exemptions have been provided for certain drugs from the price control-new drugs developed in India through product patent, process patent and new drug delivery systems would be exempted from price control for 5 years. This will boost R&D in India. Simultaneously, vaccines and biological drugs, drugs for sale to hospitals only, drugs whose MRP is at Rs. 1 per capsule / tablet and generic formulations fulfilling the prescribed norms would be exempted.

(g) A new Drugs (Prices Control) Order would be issued under the Essential Commodities Act 1955 to replace the existing DPCO, 1995.

(h) Re-structuring and strengthening of the National Pharmaceutical Pricing Authority (NPPA) – greater computerization and better monitoring.

(i) Price Monitoring Cells in the State Drug Controller Offices with funding from Government of India.

(j) Drugs (Price Management and Distribution) Act to be enacted for effective regulation of drug prices and for handling health emergencies – it will also provide compounding of minor offences.

(k) Trade Margins on generic-generic drugs, would be fixed (15% – wholesalers and 35%-retailers).

(l) Change in the name of Department of Chemicals and Petrochemicals to reflect Pharmaceuticals also (Name proposed is – Department of Chemicals, Petrochemicals and Pharmaceuticals).

(m) Draft policy along with Cabinet Note has been circulated to all Departments for their comments. On receipt of their comments it would be put up before the Cabinet.

Introduction
The world today has entered into an era of instant communication. A person sitting in the remotest corner of India can enjoy live performance taking place in the far away places like America or Africa, thanks to electronic (parallel) media. Telephone and fax have made it possible to communicate oral or written messages across the globe within seconds. The computer-aided communication technologies such as E-Mail and Internet have added altogether a new dimension to today’s communication process by making it more speedy, informative and economical. The ways through which different types of information can be communicated have also undergone a sea change. These days a film song can be put in or accessed by a single device alongwith a textual message and even a painting. While all these have made communication among people more effective and efficient both in terms of time and cost, they pose the greatest threat to the copyright world. Modern communication channels, being intensively relying on a variety of copyrighted products, are liable to be pirated in large scale, if adequate precautions are not exercised.
Copyright is the right given by law to the creators of literary, dramatic, musical and a variety of other works of mind. It ordinarily means the creator alone has the right to make copies of his or her works or alternatively, prevents all others from making such copies. The basic idea behind such protection is the premise that innovations require incentives. Copyright recognises this need and gives it a legal sanction. Moreover, commercial exploitation of copyright yields income to the creators and thus making pecuniary rewards to individual’s creativity.
The origin of copyright had a link with the invention of printing press by Gutenberg in the fifteenth century. With the easy multiplying facility made possible by the printing press, there was voluminous increase in the printing and distribution of books which ,in turn, led to adoption of unfair practices such as unauthorised printing by competing printers.

Though piracy was born by the end of the fifteenth century, it was only in 1710 the first law on copyright in the modern sense of the term came into existence in England. The law which was known as `Queen Anne’s Statute’ provided authors with the right to reprint their books for a certain number of years. The 1710 law was confined to the rights of authors of books only, and more particularly the right to reprint. It did not include other creative works such as paintings, drawings etc. which also by that time became targets of piracy, in addition to other aspects relating to books (e.g. translation, dramatisation etc.) To overcome this problem a new enactment namely `Engravers Act’ came into existence in 1735. There followed a few more enactments in the subsequent periods and ultimately Copyright Act 1911 saw the light of the day.

Developments in this regard also took place in many other advanced countries, notably among them being France, Germany and the USA. In France a copyright decree was adopted in 1791 which sanctioned the performing right and another decree of 1793 established author’s exclusive right of reproduction. In Germany author’s rights were recognised by a Saxon Order dated Feb 27, 1686. In America the first federal law on copyright, the Copyright Law 1790 provided protection to books, maps and charts.

Copyright and National Economy
Besides protecting creative potential of the society, copyright contributes to a nation on economic-front as well . The copyright based industries together generate huge employment in the country of its origin. The national exchequer benefit from the contribution made by these industries in the form of excise duty, sales tax, income tax etc. from the production and sale of copyrighted products. Given the natural demand for such products from across the national boundaries exports help consolidate country’s foreign exchange reserves position.
While there is no two views on the economic importance of copyright, it is not easy to assess it properly. The first and the foremost difficulty arises in defining the copyright based industries. In simplistic term copyright industries include all those activities which directly or indirectly depend on copyrighted materials for their commercial success. But the range of activities that come under the subject of copyright is so wide that the task of defining the copyright industry becomes difficult. These industries are drawn from a large number of different industry classifications and they are also not readily identified as an industry in the usual sense. This makes the issue more complicated.
However, there is a general consensus on the activities that come under copyright industries. It include printing and publishing of books, newspapers, journals & other periodicals, production and sale of audio products (Cassettes/CDs), production & distribution of cinemas, videos and cables, creation of computer softwares & databases and their distribution, radio and television broadcasting, advertising, photography, dramatic and musical performances etc. The list is not exhaustive. But the present study is confined to only the main segments of the copyright industry and covers cinematographic works (including video), sound recordings, literary works (mainly book publishing), computer softwares and performances.
The economic importance of copyright had been amply illustrated by a number of studies undertaken in the past in various parts of the world, notably in USA, Germany, Australia, U.K., Sweden and some other developed countries. For example, a study conducted in 1993 for the U.S.A. showed that the core copyright industries comprising motion picture, computer software, music & recording and book publishing industries accounted for $ 238.6 billion in value added to the US economy, which approximately accounted for 3.47 % of the country’s Gross Domestic Product (GDP). These industries grew at more than twice the annual growth rate of US economy as a whole between 1991 and 1993 (5.6% as against 2.7% for the economy as a whole). The total copyright industries taken together (i.e. core industries plus those distribute copyrighted products and other products those depend on wholly or principally on copyrighted materials) employed more than 5.7 million workers (about 4.8% of total U.S. workforce) and accounted for approximately 5.69% US GDP in 1993.
In India, no estimates are available to ascertain contribution of copyright based industries to the national economy. However, given the rich cultural background and huge population of the country, it is believed that copyright industries collectively contribute enormously to the economy. India is the largest audio cassette market in the world in terms of number of units sold. In 1996, India sold more than 350 million audio cassettes & CDs and the industry’s sales turnover stood at Rs.105,605 million. India’s software industry is showing a phenomenal growth. During 1996-97, the software industry in India with its size of Rs.63,100 million achieved a remarkable growth rate of above 50% over its previous year’s performance. During the same period India could export softwares worth Rs.39,000 million and the software industry provided employment to more than 160,000 people.
The publishing industry is also quite large in the country. About 11,000 publishers are engaged in producing more than 57,000 new titles every year, of which about 22% is published in English language. In 1995-96 India exported Rs.1120 million worth of books and other printed material. A sizeable portion of this (about 29.1 percent) went to advanced countries in the Europe. The print media in India comprising daily newspapers and numerous other periodicals e.g. weekly, monthly and annual journals/magazines is huge. In 1997, it had a total circulation of 10,57,08,191 and the turnover from print media is estimated to be as high as Rs. 8000 crores (table 2.1). The other core copyright industry namely film and video, also occupies an important place in the country. Film is considered as one of the best means of entertainment for the common people. India annually produces more than 600 films in major languages such as Hindi, Telugu, Tamil, Malayalam & Kannada. The demand for cable & satellite TVs are also on the rise. It is estimated that during 1996 cable connection in the country had reached about 20 million houses covering approximately 10 percent of the total households in the country.
Copyright and International Relations
The scope of copyright is not confined merely to the arena of creativity and its economic exploitation in the country of its origin. It has emerged as a major factor in international relations. In the recent past, the trade relations between the US and China deteriorated considerably over the issue of protection of Intellectual Property Rights (IPR). The US maintained that China is the worst violator of IPRs and the loss to the US economy is more than 2 billion dollars annually because of violation of its IPRs in China’s territory. The dispute took a serious turn when US trade groups wanted trade relations with China to be stopped completely. It was only after the intervention of the heads of both the countries any further deterioration was averted.
The importance of IPRs in general and copyright in particular in the relationships among the countries can be comprehended clearly from the above example. The Sino -US piracy dispute, though a recent one, is not the only case. With the advancement in technologies copyrighted items started flowing freely across the boundaries and piracy assumed an international dimension. Since the nineteenth century the countries felt the necessity of having copyright protection in foreign soil as well. As a result, negotiations were held between countries which in some cases resulted in the conclusion of multilateral treaties.
The first multilateral agreement on copyright is the Berne Convention which was concluded in 1886 and was meant for providing protection to literary and artistic works. A country joining the Convention has to provide copyright protection to literary and artistic works of member countries in its own territory and also entitled for enjoying reciprocal protection from others. The Berne Convention was revised seven times in 1896 (at Paris), 1908 (at Berlin), 1928 (at Rome), 1948 (at Brussels) , 1967 (at Stockholm) and 1971 (at Paris) and finally in 1978. Among these, the 1971 revision (the Paris Act) is of particular importance to the developing countries as it provided special concessions to these countries in making translations and reproduction of foreign literary works for educational purposes. Ninety countries are at present member of the Berne Convention.
The post Second World War era saw the emergence of the need for protecting copyright on an universal basis. Till then countries in the North America were not party to the Berne Convention and copyright protection in these countries were governed by various national and regional agreements. In August, 1952 the Intergovernmental Copyright Conference was convened in Geneva which led to the adoption of another historical copyright convention, namely the Universal Copyright Convention (UCC). The UCC is not a substitute for the Berne Convention. Rather it tried to establish the link between the countries on the Bern Union and those in North America. India is a member of both the Berne Convention and the UCC.
In recent years, the issue of IPRs figured prominently in the Uruguay Round of General Agreement on Tariffs and Trade (GATT). It is for the first time the GATT went beyond its usual mandate to include the IPRs. The Trade Related Aspects of Intellectual Property Rights (TRIPS) is set out in Annex 1C of the Final Uruguay Round Text. The text comprises 73 articles grouped in seven different parts. The standards for specific IPRs such as copyright and neighbouring rights are discussed in part II.

Copyright in India
The copyright in India has travelled a long way since it was introduced during the British rule. The first law on copyright was enacted in the year 1847 by the then Governor General of India. When Copyright Act 1911 came into existence in England, it became automatically applicable to India, being India an integral part of British Raj. This act was in force in the country until after independence when a new copyright act (the Act of 1957) came into effect in 1958. Thereafter the Act has undergone many amendments. The latest in the series is the 1994 Amendment, which came into force in May 1995.
The Indian Copyright Act confers copyright on (i) original literary, dramatic, musical and artistic works, (ii) cinematographic films and (iii) sound recordings. The word `original’ means that it should not be copied from other works or alternatively it should be the outcome of independent efforts. The Act empowers copyright holder(s) to do or authorise doing a number of activities. The important among these are:
to reproduce the wk in material form

to publish the work

to perform the work in public or communicate it to the public

to produce, reproduce, perform or publish any translation of the work

to make any cinematographic film or a record in respect of the work

to make any adaptation of the work

to do, in relation to a translation or an adaptation of the work, any of the acts specified to the work in sub clauses to (a) to (f).

The above mentioned rights are `exclusive’ in the sense that the creator (or rightholder) alone has the right to enjoy these to the exclusion of others. The author by virtue of his creation becomes the `owner’ of the copyright in the work. However, there can be exceptions to this as in the following two cases :-
The creator may be employed by some one and having been employed to create a work, the rights belong to the employer – not the creator(s), and

The creator may transfer his copyright by a document in writing to another person. This is known as assignment.

The grant of copyright is a limited monopoly. It is limited in the `scope’ of the rights granted and in terms of `time’. In India, copyright on a literary work is provided for the lifetime of the author plus sixty years after his death. In case of joint authorship, the sixty years period is calculated from the beginning of the calendar year following the year in which the last (surviving) author dies. Copyright with respect to photographs, cinematographic works and sound recordings spans for 60 years of its first publication. In order to strike a balance between the society’s need for access to knowledge and the need to rewarding creators, limited uses of copyright protected works are permitted without authors consent. These are called `fair use’ of copyright. Section 52 of Indian Copyright Act permits certain activities which do not amount to infringement. Important in this `exception list’ are reproduction of literary, dramatic, musical or artistic works for educational purposes, e.g. research, review etc., and reporting in newspapers, magazines and periodicals etc.
The Copyright Act of India provides rightholders a dual legal machinery for enforcing their rights. The enforcement is possible through (1) the Copyright Board and (2) the courts. Legal remedies include imprisonment and/or monetary fines – depending upon the gravity of the crime. Sometimes remedies also include seizure, forfeiture and destruction of infringing copies and the plates used for making such copies. The 1984 amendment has made copyright infringement a cognizable non-bailable offence. Under the provisions of the Act any person who knowingly infringes or abets the infringement of copyright is considered as an offender and is punishable with a minimum of six months imprisonment which may extend to three years and a fine between fifty thousand and two lakhs rupees. The 1994 Amendment has incorporated a special penal provision for knowingly using an infringing computer software. The punishment provided for this act is imprisonment for a term of seven days to a maximum of three years and a fine between fifty thousand and two lakh rupees. In case the infringing copy of the computer software is used not for pecuniary gain or in the course of trade or business, the imprisonment can be relaxed and fine can be maximum of fifty thousand rupees.
Beside amending the Copyright Act the Indian Government has taken few more steps in strengthening the enforcement in the country. A Copyright Enforcement Advisory Council has been set up for advising the Government on measures for improving the copyright enforcement. Training programmes and seminars are arranged for police personnel. Necessary legislation was made for bringing video shops, cable operators under regulation. State governments are encouraged to set up IPR cells for exclusively dealing with copyright and other IPR violations. In spite of all these, enforcement of IPR violations, particularly copyright violations has not been strong enough in the country and piracy prevails exits in all types of copyright works notably musical works, video films and softwares.

Copyright Piracy

Copyright piracy is a phenomenon prevalent worldwide. Piracy means unauthorised reproduction, importing or distribution either of the whole or of a substantial part of works protected by copyright. The author of a copyrighted work, being the owner, enjoys certain exclusive rights with respect to his or her works. These include right to reproduce, to publish, to adopt, to translate and to perform in public. The owner can also sell, assign, license or bequeath the copyright to another party if he wishes so. If any person other than the copyright owner or his authorised party undertakes any of the above mentioned activities with respect to a copyrighted product, it amounts to infringement of the copyright. Copyright piracy is thus like any other theft which leads to loss to the owners of the property. Besides economic loss, piracy also adversely affects the creative potential of a society as it denies creative people such as authors and artists their legitimate dues.
There are different ways through which piracy takes place. A computer software is pirated by simply copying it onto another machine not authorised for its use. Book piracy takes place when a book is reproduced by someone other than the real publisher and sold in the market. A performer’s right is violated when a live performance of an artist is recorded or telecasted live without his/her permission. In a cinematographic work piracy generally takes place through unauthorised reproduction of the film in video forms and/or displaying the video through cable networks without taking proper authorisation from the film producer (the right holder). In fact, there are numerous other ways through which piracy of copyrighted works take place. The nature and extent of piracy also vary across the segments of the copyright industry. It is, therefore, necessary to discuss the nature and extent of piracy problems segment wise. Such an attempt is made in the following paragraphs.

Literary Works

Piracy of literary works means illegal reproduction of books and other printed materials and distribution/selling of these for profit. In India, the journals/magazines and other periodicals are not pirated much. Here piracy of literary works generally takes place in three principal ways. : 1) wholesale reprinting of text and trade books 2) unauthorised translations and 3) commercial photocopying of books/ journals. Many a time piracy takes the form of publishing fake books, where authors shown in books are not the real authors.
Book piracy, in India, primarily depends on two factors, namely, the price of the book and its popularity. These two factors positively contribute to piracy. Piracy is generally confined to foreign and good indigenous books. Because these books are demanded in large quantities and are also priced high. The types of books pirated mostly are medical, engineering and other professional books, encyclopaedia and popular fictions. The piracy is also wide spread with respect to books published by National Council of Educational Research & Training (NCERT), National Open School and Board(s) of Secondary Education. These books even if priced low are having large demand.
The pirates first identify books to be pirated and then get the same printed in large numbers through unscrupulous printers. The pirated books are normally sold with other (legitimate) books by usual retailers identified by the pirates. The number of printers/sellers involved in piracy is generally less. The piracy is also seasonal in nature. The entire process of printing through selling get over within a month or two.
Besides the above, piracy in the form of mass photocopying of books is largely prevalent in India, especially in and around educational institutions. Students borrow books from libraries and then get these photocopied from the photocopier kept at the institution where from the books are borrowed. While copyright law permits photocopying of literary works for limited private uses such as research, review or criticism what happens, many a time is that the entire book is photocopied including the cover pages. In the process student community and the photocopy operators gain, but the publishers lose a huge revenue. Unfortunately, the institutions turn a blind eye to this.
Sometimes even some renowned publishers involve themselves in piracy by way of selling books beyond the contract period. This happens when an Indian publisher buys re-print rights from some foreign publishers and keeps on selling books even after the expiry of the period mentioned in the agreement. This is done in the pretext of clearing old stock. Thus an impression is created that books are printed during the contract period but in reality are sold beyond the contract period just to exhaust the old stock.
The other way through which piracy takes place is printing/selling of books meant for review. Many foreign publishers send books to India for review. The pirates somehow get access to such books and make quick prints to sell in Indian market. All these happen much before the authorised Indian distributors get their copies for selling in India. Naturally, the distributors’ sales get affected adversely.
Piracy of literary works leads to loss of revenue to publishers (in terms of less sales), authors (non-payment of royalty) and the national exchequer (non-payment of income tax and other levies payable by publishers/authors). While it is believed that book piracy is high in India, it is very difficult to arrive at an estimate. Only information from secondary sources (e.g. publishers, police records etc.) can be gathered to form a rough idea on piracy. But that would reflect only the tip of the iceberg. In terms of percentage, it is believed that about 20-25 percent of books sold (in number) in the country are pirated. Actual monetary loss due to piracy is anybody’s guess.
Anti piracy drive with respect to books is generally weak in India. The industry associations are not very active in this regard. Whatever action is taken is done by the respective publishers. The enforcement machinaries (such as police) are also not very active in controlling piracy for a variety of reasons. The public awareness is also very poor.
Besides the above, Indian books are also pirated abroad, especially in the neighbouring countries such as Pakistan, Bangladesh etc. India exports books to a large number of countries including developed countries from Europe. During 1995-96 India exported books to the tune of Rs.1120 million. Exports earnings could have been much more in the absence of wide spread piracy of Indian works abroad. Similarly, foreign literary works are pirated in India. Given the low and rapidly declining value of rupee in terms of hard currencies good foreign books (e.g. US books) cost very high in India. As a result majority of the readers individually can not afford to buy these books. In such circumstances, piracy provides the escape route, because a pirated foreign book in India can be as cheap as half the original price or even less. The International Intellectual Property Alliance (IIPA) estimated that in 1995 trade loss due to piracy of US books in India amounted to $ 25 million.

Sound Recordings

The sound recording industry faces three types of piracy. First, there is a simple way by which songs from different legitimate cassettes/CDs (and thus different rightholders) are copied and put in a single cassette/CD. These are then packaged to look different from the original products and sold in the market. Second, there is counterfeiting, when songs are copied in to and packaged to look as close to the original as possible using the same label, logos etc. These products are misleading in the sense that ordinary end users think that they are buying original products. The third form of music piracy is bootlegging, where unauthorised recordings of performance by artists are made and subsequently reproduced and sold in the market. All these happen without the knowledge of the performers, composer or the recording company,
Earlier the music piracy was confined to cassette tapes only. With the advent of CDs in the eighties it was thought that piracy of sound recordings would become things of the past. But in reality CD piracy is the greatest threat to today’s music world. Infact, with CDs piracy has got an international vigour. Fortunately or unfortunately, CD industry is still in it nascent stage in India. At present CD market is just 2 to 3 percent of the overall music market in the country. CDs have not taken off mainly because of high prices. In India CDs are sold on an average price ranging between Rs.150 to Rs.550. Considering price of cassettes, the price differential (between cassettes and CDs) is quite high and prohibitive for ordinary music lovers.
Cassette piracy in India is as old as the cassette industry itself. Govt. policy put music industry in the small scale category and volume of a record company’s cassette production was restricted to 300,000 units per annum. This led to a wide gap in the demand supply front which was ultimately bridged by the pirates. Even if music piracy percentage has declined from a high of 95% in 1985 to about 30% in 1995, India is the world’s sixth largest pirate market in value terms (table 2.2) but third in volume terms (table 2.3). In 1995, more than 128 million pirated cassettes/CDs were sold as against the sale of 325 millions of legitimate audio products. The sale of pirated cassettes/CDs (both in number & value) is also on the rise in the country. However in contrast to many developed countries piracy of CDs is low in India. At present CD piracy is below 10% level.
The popularity of Indian music has gone beyond the national boundaries. There is large demand for Indian music in the neighbouring countries such as Pakistan, West Asia as well as far off countries like USA, Canada and the UK. Indian music is also pirated in some of these foreign countries, the notable among these being Pakistan and the West Asia. Similarly, foreign audio products are also subject to piracy in Indian soil. As per IIPA’s estimate the trade losses due piracy of American audio products alone in India was to the tune of US $ 10 million in 1995.

Cinematographic Works

Copyright in cinematographic works is more complex in nature as there exists a variety of copyrights in a single work and many a times these rights are also overlapping. The first right in a film is the `theatrical right’ i.e. the right to exhibit films in theatres. The producer is the copyright holder. The distributors buy theatrical rights from producers and then make some arrangements with the theatre owners for actual exhibition to the public. The theatrical rights are limited by territory and time. Films are also released in video cassettes. In fact, these days viewing film at home has become more popular than seeing the same at theatres. The producers sell the video rights to another party, who makes video cassettes for sale in the market. These cassettes are meant for `home viewing’ only i.e. one can buy a copy of it for seeing at home with family members and friends. Such cassettes can not be used for showing the film in cables or through satellite channels. Because showing films in cables or satellite channels require acquisition of separate sets of rights namely `cable rights’, and `satellite rights’.
A cable network is generally limited to local areas as it requires receivers (viewers’ TVs) which are to be physically connected through cable wire to the operators. In case of satellite channels, however, there is no such physical limit as transmission takes place through air and received at the users end by dish antenna(s). Interestingly in India satellite transmissions, in most of the cases, reach to endusers through cable networks only.
The cable networks in India work in a two-tier system. At the top there are main operators who transmit their programmes through numerous small local operators on a franchise basis. As mentioned earlier programmes of satellite channels reach the viewers through cable networks. The (main)cable operators do not pay anything to satellite channels for showing latter’s programmes in the network, except for pay channels (e.g. ESPN, Zee Cinema, Movie Club etc). The small cable operators, however, share their incomes with their respective main operators. The revenue for small operators come from the subscription of viewers.
Music is an integral part of any cinematographic work. In India, film sound tracks account for almost 80% of the total music market. Even if film producer has the copyright in the film, the music included in the film is the outcome of efforts undertaken by a separate group of creative people such as the composer, lyricists etc.- each of which is a rightholder of its own right. Generally the producer sells this right to a music company who makes cassettes/CDs of such songs for sale in the market. The incidence of a large number of rights in a single work and the involvement of a variety of right holders make the copyright issue very complicated in cinematographic works.
Piracy of cinematographic works takes two principal forms, namely `video piracy’ and `cable piracy’. However, piracy in one form can spill over and affect the revenues of the other. Video piracy takes place when a film is produced in the form of video cassette without taking proper authorisation from the right holder i.e. producer. Many times producers of films sell video rights to another party (generally after six weeks or more of release in theatres ) who makes video cassettes for selling or lending. The video cassettes kept for sale are meant for home viewing only. Any commercial use of such cassettes like in video parlours or in cable networks amounts to copyright violation. Two types of video piracies are common in India. One, where video right for films has not been sold at all (by the producer) but video cassettes are available in the market for buying or borrowing. And two, when video right is (legally) sold to a party, but cassettes are made and sold by others (pirates) as well.
Cable piracy is unauthorised transmission of films through cable network. As mentioned above, showing a film in a cable network requires acquisition of proper authorisation from the rightholder. But many a time, films , especially the new releases, are shown through cables without such authorisation, which tantamounts to piracy.
Piracy is a rare phenomenon in satellite channels because such channels are organised and generally do not show films without buying proper rights. But there are cases where right of one channel operator is violated by others.

It is very difficult to give even a rough estimate of video piracy in India because information in this regard is scanty and not accessible. But video piracy in both the forms are quite rampant here. Besides this, piracy through video parlours is largely prevalent normally in the rural India or smaller towns. Perhaps more widespread and damaging is the cable piracy. These days almost all new releases are shown in the cable simultaneously with the exhibitions in theatres . As per a resolution adopted by the Film Makers Combine, video release of a film can be made only after six weeks of theatrical release. But cable operators show such films much before the stipulated time period. This is a clear case of cable piracy and its extent is considerably high in country.
All parties involved in the legitimate transaction of films – from the producers to the theatre owners, lose heavily because of widespread video or cable piracy. The Government also loses because pirates’ activities do not bring in any revenue such as entertainment tax at theatres and excise duty and sales tax at the points of legitimate production/selling.

Computer Software

The piracy in computer software simply means copying and distribution of computer programmes without the copyright holders permission. The software industry, generally, consists of creation and distribution of computer programmes. Creation of computer programme is similar to writing a novel or other literary works and it requires intellectual skill and training in software programming. Though a software can be written by individual programmer, most of the major software’s are the outcome of group efforts, where medium to large sized teams spend months or even years to write a complete programme.
Distribution of computer programmes in most of the developed countries occurs through a two-tiered system of wholesalers and dealers, similar to that of many other industries. The software publishers make a substantial amount of their shipments to a small number of distributors in any given country, who maintain well-stocked warehouses and can respond quickly to orders from hundreds or thousands of individual retail dealers or resellers. The dealers market and provide the software products directly to end-users of computers. The end users can be individuals, commercial enterprises, educational institutions and government establishments. Sometimes, software publishers also deal directly with a small number of the largesr dealers or resellers in an individual country. Licensing is a common practice in software industries. The publisher of a software generally authorises its end users through the mechanism of the shrink-wrap license contained in the package.
Like other copyright based industries, the software industry also faces several forms of piracy. In fact, piracy in software is more than in others because it is relatively easy to copy a software in computers especially in PCs and for all practical purposes the pirated version looks and performs in an identical manner as the original. The five principal types of software piracy involve (1) counterfeiters (2) resellers (3) mail order houses (4) bulletin boards and (5) end-user piracy. Counterfeiters are relatively new phenomenon in the software industry and most flagrant software counterfeiters produce disks, documentation and packaging that look very similar to those of the software publisher. Reseller piracy occurs in the software distribution channel, when distributors or dealers either make copies of software onto floppy disks, or the internal storage device or the “hard disk” of computers that they are selling, without authorisation from the software publisher. Mail-order piracy consists of the unauthorised copying of software onto diskettes, CDs, or other media and distribution of such software by post. Bulletin board pirates engage in unauthorised reproduction and distribution of software via telecommunication. Typically, this involves an individual computer user who has installed a number of software programmes on his computer, and who allows other users to connect to his computer through the telephone line via modem and copy the programmes onto discs. The pirate in most cases has copied the programme onto his own computer without authorisation of the copyright holder’s consent is also a copyright violation. End-user piracy takes place when a user copying software onto hard disks of more comptuers than the number authorised by the publisher. This form of piracy perhaps takes place on a wider scale than other forms because end-users often make substantial copies of the softwares possessed by them and then distribute or exchange the same. Though this harms the interests of rightholders, endusers definitely gain out of it because this leads to obvious economic advantages for them.
Identifying a pirated software is not an easy task. This is primarily for two reasons. First, as mentioned earlier there is hardly any difference between an original software and a pirated software, once it is copied onto a hardware. Second, detection of piracy requires access to software or hardware or both, which may not be feasible in many cases. However, there are some ways through which an unauthorised copy of a software can be identified. Many a times publishers supply softwares in packaged form which contain software on diskettes with printed labels giving manufacturer’s name, full product name, version number, trade mark and copyright notices. Besides these, the packages also typically, contain professionally printed documentation, a keyboard template, enduser license and registration cards and other printed materials pursuant to a standard bill of materials that would apply to all packages of that particular product. In such cases, the most simple pirated copies may be spotted easily on “black-disks”, which do not contain manufacture’s label but rather type written, hand-written or crudely printed labels indicating the programmes contained on the diskettes. In case of installed software it is more difficult to identify a pirated copy. Once a computer is searched, the programmes copied onto it can be found and identified. Then users can be asked to produce the proof of original possession (e.g. original packages, documentation, purchase record, license cards etc.) of such programmes. If users fail to do so, there is a prima facie case of infringement. In some cases even test purchases can be made to secure evidence of piracy.
The extent of software piracy and losses due to such piracy cannot be given in exact quantitative terms though it is believed that piracy in this sector is wide spread. In Europe alone the sofware industries lose an estimated $ 6 billion a year. In fact, Europe holds the dubious distinction of accounting for about 50 per cent of world wide losses from software piracy, more than any other region including the number two Asia. According to a study of Software Publishers Association, a US based body, losses due to piracy of personal computer business application softwares nearly equalled revenues earned by the global software industry. In 1996, piracy costed the software industry US $ 11.2 billion, a 16 percent decrease over the estimated losses of Us $ 13.3 billion in 1995. The country-specific data show that in 1996 Vietnam and Indonesia had the highest piracy rate of 99 per cent and 97 percent respectively, followed by China (96%), Russia (91%), Thailand (80%) etc. In India software piracy is costing the IT industry quite dear. According to a survey conducted jointly by Business Software Alliance (BSA) and NASSCOM in May 1996, total losses due to software piracy in India stood at a staggering figure of about Rs. 500 crores (US $ 151.3 million) showing about 60 per cent piracy rate in India.

Conclusion
Piracy of copyrighted products is a problem as old as the copyright itself. Only in recent years it has received prominence, especially in the academic and policy circles. In India, no official estimate is available to indicate the extent of piracy and associated economic loss. But perceptions are that the piracy is a big problem.
The main reasons behind copyright piracy are poor enforcement and lack of awareness on copyright matters. The copyright laws of India are as good as those of many advanced countries in Europe and America, where concern for copyright is at a high level. Punishments prescribed for violators are stringent and comparable to those of many countries in the world (Table 2.4). But laws alone can do little justice unless implemented properly. The enforcement mechanism is weak in the country.
Even police personnel, who can play a major role in combating piracy, are not fully aware of various provisions of the law. There is also lack of adequate number of personnel who can fully devote to copyright crimes alone. The police is more concerned with usual law and order problems and copyright related crimes are attached least priority.
The awareness level among end-users is also very low. While buying a copyrighted product, majority of consumers do not look at copyright notification (e.g. C or P ). As long as price is low (as generally is the case with pirated products) users do not mind buying pirated products even knowingly.
Table 2.2 : Top Ten Pirate Territories (Value)

Country Pirate sales in US $ (million) Pirate % of total sales % of world pirate sales

Russia 363.1 62% 17%
USA 279.4 2% 13%
China 168.0 48% 8%
Italy 145.6 20% 7%
Brazil 118.8 10% 6%
Germany 92.2 3% 4%
Mexico 85.3 22% 4%
India 82.1 23% 4%
Pakistan 62.1 94% 3%
France 58.5 2% 3%
T o t a l 1,455.0 68%

Source: International Federation of Phonographic Industry (IFPI), London
Table 2.3 : Top Ten Pirate Territories (Units)

Country Pirate sales in (millions) Pirate % of country’s total sales % of world pirate sales
Russia 222.3 73% 23%
China 145.0 54% 15%
India 128.4 30% 13%
Pakistan 75.4 94% 8%
Mexico 70.0 54% 7%
Brazil 62.4 45% 7%
USA 26.6 3% 3%
Italy 21.5 33% 2%
Romania 21.5 85% 2%
Turkey 16.4 30% 2%
T o t a l 789.5 83%

Source: Same as Table 2.2
Table 2.4 Summary and Comparison of Criminal Penalties for Copyright Infringement in Selected Countries

Country Fines/Penalty Imprisonment Terms
U.S.A Upto $ 250,000 for a first offence of infringement by an individual done in ” Willfully and for purposes of commercial advantage or private financial gain”.
Upto 5 years
Upto $ 250,000 for a second offence by an individual. Upto 10 years
Upto $ 50,000 for first offence by an organisation. Upto 5 years
Upto $ 500,000 for a second offence by an organisation. Upto 10 years
France 6,000 to 120,000 Francs (about US $ 1070 to US $ 21,428) for a first offence of infringement.
Double the above penalties for second offence.
3 months to 2 years
Poland Unspecified fines for unauthorised dissemination for purposes of economic gain. Upto 2 years in jail
Unspecified fine if the infringer turn the above offence into a regular source of income for a criminal commercial activity and organises or direct such acitivity. Not less than 6 months and not more than 5 years.
Unspecified fine for unauthorised fixation or reproduction activity. Upto 2 years in jail.
(Reported the maximum criminal fine under the penal code is 250 million zloty (about $ 11,075) Upto 3 years in jail.
Hungary Unspecified fine for infringements causing considerable damage. Upto 3 years.
Unspecified fine for infringements causing particularly high pecuniary damage. Upto 5 years.
Greece 1 to 5 million Drachmas (about $ 4,050 to $ 20,485) for infringing acts Atleast 1 year.
2 to 10 million Drachmas (about $ 8,100 to $ 40,485) applies if the intended profit or damage threatened by infringing acts are particularly large. Atleast 2 years.
Portugal The equivalent of between 150 and 250 days for infringements of enumerated acts.

The above penalty doubles for repeated offence, provided that the offence in question does not constitute an offence punishable by a more severe penalty.
Upto 3 years.
Singapore Upto $ 10,000 for the article or $ 100,000 whichever is lower. Upto 5 years
Upto $ 6,666 or $ 66,000 for violation of the reproduction and the display rights and to the sale or importation of infringing copies. Upto 3 years.
Upto $ 50,000 (US $ 33,335) for violation of the distribution right. Upto 3 years.
Upto $ 20,000 (US $ 13,333) for making or possession of a “plate or similar contrivance for the purpose of making infringing copies of sound recordings or audio – visual works and for violation of the public performance right. Upto 2 years.