text:
United States of America v. A.C.
United States of America v. T.H.D.
United States of America v. H.Q.T.
United States of America v. O.U.
State of Georgia v. E.W.B.
State of Georgia v. P.T.L.
People of the State of Michigan v. R.W.R.
People of the State of Michigan v. J.S.
People of the State of Michigan v. G.G.
People of the State of Michigan v. V.K.
State of Georgia v. A.R.G.
B.J.P. v. G.H.C. and Memorial 285, Inc.
K.K. v. L.P.B. and M.B.
A.P. and M.K. v. FWC Property Operating Company I, LP, FWC AA GP, LLC, Worthing Cameron Crest LP, and A.R.
The Law Offiices of Margolis & Gallagher serves clients in Wayne County, Oakland County, Macomb County, Washtenaw County, Livingston County and Jackson County, including Ann Arbor, Detroit, Warren, Livonia, Windsor, and Sterling Heights, Michigan as well as Atlanta, Fulton County, Dekalb County, Cobb County, Gwinnett County, Georgia, and across the country.

matches: v. v. v. v. v. v. v. v. v. v. v. v. v. v.


text:
Thomas L. Strickland, United States Attorney, and Martha A. Paluch, Assistant United States Attorney, Denver, Colorado, for Defendants-Appellees.
Plaintiff-Appellant Horace Oxendine ("Oxendine") filed a lawsuit pursuant to Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971), on June 30, 1999, alleging that health care professionals (and various others who were later dismissed from the lawsuit(1)) at the Federal Correctional Institute ("FCI") in Florence, Colorado, provided him with inadequate and delayed medical care during the course of his incarceration. The district court dismissed Oxendine's complaint for failure to state a claim on which relief could be granted, see Fed. R. Civ. P. 12(b)(6), and we REVERSE.
After Oxendine twice amended his complaint pursuant to orders of the district court, Defendants filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1), for lack of subject matter jurisdiction, and 12(b)(6), for failure to state a claim on which relief can be granted.
Reviewing the district court's decision to dismiss Oxendine's complaint for failure to state a claim de novo, see Sutton v. Utah State School for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999), we find that Oxendine's complaint presents facts which, if true, could entitle him to relief under Bivens. We must therefore reverse the district court's judgment dismissing Oxendine's complaint for failure to state a claim.
[E]lementary principles establish the government's obligation to provide medical care for those whom it is punishing by incarceration. An inmate must rely on prison authorities to treat his medical needs; if the authorities fail to do so, those needs will not be met. In the worst cases, such a failure may actually produce physical "torture or a lingering death," the evils of most immediate concern to the drafters of the Amendment. In less serious cases, denial of medical care may result in pain and suffering which no one suggests would serve any penological purpose. The infliction of such unnecessary suffering is inconsistent with contemporary standards of decency . . . .
Estelle v. Gamble, 429 U.S. 97, 103 (1976). In keeping with the principle that government officials are generally afforded wide latitude when fulfilling their discretionary functions, see Anderson v. Creighton, 483 U.S. 635, 638 (1987), however, in cases where prisoners allege that inadequate or delayed medical care violated their Eighth Amendment rights, it has been established that "[p]rison officials violate the Eighth Amendment [only] when they are deliberately indifferent to the serious medical needs of prisoners in their custody." Perkins, 165 F.3d at 811 (citing Estelle, 429 U.S. at 104-06). Eighth Amendment claims alleging inadequate or delayed medical care thus involve both an objective and a subjective component, such that we must determine both "whether the deprivation is sufficiently serious" and "whether the [government] official acted with a sufficiently culpable state of mind." See id. at 809.
In regard to the objective element, a medical need is considered "sufficiently serious" if the condition "has been diagnosed by a physician as mandating treatment or . . . is so obvious that even a lay person would easily recognize the necessity for a doctor's attention." Hunt v. Uphoff, 199 F.3d 1220, 1224 (10th Cir. 1999) (citations and quotations omitted). We note, however, that "[d]elay in medical care only constitutes an Eighth Amendment violation where the plaintiff can show that the delay resulted in substantial harm." Sealock v. Colorado, 218 F.3d 1205, 1210 (10th Cir. 2000). As for the subjective element, we have stated that "a plaintiff must establish that defendant(s) knew he faced a substantial risk of harm and disregarded that risk, 'by failing to take reasonable measures to abate it.'" Hunt, 199 F.3d at 1224 (quoting Farmer v. Brennan, 511 U.S. 825, 847 (1994)). Whether the prison official had the requisite knowledge of a substantial risk to an inmate's health or safety "is a question of fact subject to demonstration in the usual ways, including inference from circumstantial evidence, and a factfinder may conclude that a prison official knew of a substantial risk from the very fact that the risk was obvious." See Farmer, 511 U.S. at 842 (citation omitted).
Accordingly, for Oxendine to properly set forth an Eighth Amendment claim on which relief may be granted, he must set forth facts demonstrating that his alleged medical need, in this case the need for an outside medical specialist, "was 'sufficiently serious' to meet the objective element of the deliberate indifference test," Sealock, 218 F.3d at 1210, and that the Defendants' delay in meeting that need caused him "substantial harm," see id..(7) Finally, to meet the subjective element of the deliberate indifference test, he must allege facts supporting an inference that Defendants knew about and disregarded a "substantial risk of harm" to his health or safety. See Hunt, 199 F.3d at 1224.
In his complaint, Oxendine states that, on March 14, 1999, after his fingertip was severed by his cell door, the guard on duty "rushed to the assigned room of inmate Oxendine and recovered the amputated portion of [Oxendine's] finger[,] which he promptly deposited in a container of ice for preservation." Oxendine was then taken to the infirmary, where officials paged Dr. Kaplan. Dr. Kaplan arrived approximately one hour later and, with the assistance of Jose Negron, surgically reattached the severed portion of Oxendine's finger to the remaining portion of Oxendine's finger. Oxendine was given Tylenol with codeine for the pain and sent back to his cell with instructions to return to the infirmary the next day. When Oxendine returned the next day, March 15, Dr. Kaplan examined and redressed the wound, noted in Oxendine's chart "tissue of reattached portion - viable", gave Oxendine more aspirin with codeine for the pain, and told Oxendine to "return to Health Services each successive day for the following two weeks."
In his complaint, Oxendine alleged that he saw Dr. Kaplan for at least two weeks, or 14 days, after his injury (which would encompass the dates March 15 to March 29), and possibly for a much longer period of time, before Dr. Kaplan finally "sought out and acquired outside qualified medical help." Specifically, Oxendine stated that Dr. Kaplan insisted that the finger was healing properly and administered Tylenol for Oxendine's pain on March 15, as well as "on each subsequent visit by inmate Oxendine to Health Services for the next two weeks." "By this time," Oxendine alleged, "the reattached portion of the finger had turned jet-black . . . [and] on numerous occasions inmate Oxendine informed Dr. Kaplan that the amputated portion of the finger was gradually falling off from the remaining section of the finger." Oxendine further stated: "At that time and upon all following visits to Health Services, inmate Oxendine implored Dr. Kaplan to obtain a specialist in the field so that he would not lose that portion of his finger . . . . Dr. Kaplan repeatedly refused to send inmate Oxendine outside the institution to acquire a certified specialist and for a considerable period of time refused to bring into the institution same." Finally, alleged Oxendine, "after it was much too late to save the amputated portion of the finger, Dr. Kaplan sought out and acquired outside qualified medical help. But, at that eleventh hour it was too late to save the portion because the majority of that had already fell off."
We have no doubt that Oxendine's severed finger, reattachment thereof, and subsequent worsening of the wound due to decaying tissue presented a serious medical need for purposes of the Eighth Amendment. The question, then, is whether Oxendine alleged facts sufficient to support a claim that Defendants exhibited "deliberate indifference" to that need.
Accepting, as we must, all factual allegations contained in Oxendine's complaint as true and construing those allegations in the light most favorable to Oxendine, see Breidenbach v. Bolish, 126 F.3d 1288, 1292 (10th Cir. 1997), it appears that Dr. Kaplan did not obtain outside medical assistance to treat Oxendine's injury until at least March 29, 1999, and quite possibly much later. This inaction by Dr. Kaplan occurred despite Oxendine's repeated reports of discomfort and blackening skin tissue on his reattached finger, and despite signs recorded by health care personnel and by Dr. Kaplan himself, of which Dr. Kaplan was unquestionably aware no later than March 22, 1999, of necrosis of the distal skin tissue on Oxendine's reattached finger.
Assuming these facts are true, the alleged delay in obtaining specialized medical treatment meets the objective element of the deliberate indifference test. The ineffectiveness of Dr. Kaplan's reattachment and subsequent care of the severed finger, as evidenced by the blackening and necrifying tissue, was "sufficiently serious" because it was "so obvious that even a lay person would easily recognize the necessity for a doctor's attention." See Hunt, 199 F.3d at 1224. In addition, the delay in seeking specialized treatment apparently caused Oxendine substantial harm due to the fact that a specialist was not obtained until after a substantial portion of the reattached finger had already been lost to decay, and because Oxendine experienced considerable pain while the finger continued to rot. See Hunt, 199 F.3d at 1224 (stating that officials may be "held liable when [a] delay results in a lifelong handicap or a permanent loss"); Sealock, 218 F.3d at 1210 ("The pain and suffering imposed by Barrett's failure to get him treatment lasted several hours. . . . Certainly, not every twinge of pain suffered as a result of delay in medical care is actionable. The evidence in this case, however, establishes the objective element of the deliberate indifference test.").
In regard to the subjective portion of the deliberate indifference test, we find that Oxendine has alleged facts supporting an inference that Dr. Kaplan knew about and disregarded a substantial risk to Oxendine's health. The complaint and attached documents demonstrate: (1) Dr. Kaplan acknowledged the delicate nature of the operation and follow-up care of Oxendine's finger by requiring daily visits by Oxendine to the infirmary; (2) Oxendine repeatedly informed Dr. Kaplan that his finger "had turned jet black," "that the amputated portion was gradually falling off from the remaining section of the finger," and that he was in considerable pain due to the decaying skin tissue; (3) decaying tissue appeared as early as March 20, 1999, and Dr. Kaplan himself recorded evidence of gangrenous tissue on March 22, 1999; and (4) Dr. Kaplan did not seek specialized medical assistance to deal with Oxendine's decaying finger until at least March 29, 1999, and quite possibly much later. Given these alleged facts, we find that Oxendine has made sufficient allegations to satisfy the subjective element of the deliberate indifference test for purposes of defeating a Rule 12(b)(6) motion. Accord Sealock, 218 F.3d at 1211 (noting that one type of deliberate indifference is evidenced "when prison officials prevent an inmate from receiving treatment or deny him access to medical personnel capable of evaluating the need for treatment") (emphasis added).
In addition, Oxendine alleged that Dr. Kaplan, assisted by Jose Negron, was not qualified to perform this particular surgery, but nevertheless performed the operation without seeking assistance from a specialized, qualified surgeon who would be capable of successfully reattaching Oxendine's finger. Again, taking Oxendine's allegations as true, we cannot say he has failed to state a claim upon which relief may be granted based upon the deliberate indifference of Dr. Kaplan and Jose Negron to Oxendine's serious medical needs.
This is not to say that Oxendine will prevail on his claim once the Defendants are given an opportunity to clarify and explain their actions in regard to Oxendine's medical treatment. But we are tasked with deciding only whether Oxendine has alleged sufficient facts to support a claim that he was denied adequate and timely medical care in violation of the Eighth Amendment, such that it would be improper to dismiss the complaint pursuant to Rule 12(b)(6). For the foregoing reasons, we find that he has done so. Accordingly, we REVERSE the decision of the district court and REMAND for further proceedings not inconsistent with this opinion.
1. The other defendants to this action, A. Hererra, C. Lamb, D. Livingston, J. Brown, and M. Azumah, were dismissed from the lawsuit on September 14, 1999, by order of the district court.
2. It is not clear from Oxendine's complaint how much of his finger was severed, but the medical charts attached to his complaint refer to Oxendine's "Skin, Nail, Nail Bed, 1/2 Terminal Phalanx" and describe the reattachment procedure as "remodle [sic] Bone, Full Thickness Skin, Nail Bed, & reimplantation of Full Thick Skin."
3. Although Oxendine has not exhausted any administrative remedies regarding these claims, they were allowed to proceed because he was seeking money damages only in his Bivens action. See Garrett v. Hawk, 127 F.3d 1263, 1267 (10th Cir. 1997) ("Congress has to date failed to provide any administrative remedies that must or even could be exhausted before a Bivens suit may be brought by prisoners against prison officials. While Congress easily can amend this oversight, until an administrative remedy is provided for Bivens claims for monetary damages, we must conclude that no exhaustion of administrative remedies is required . . . .").
4. The district court noted that negligence claims against government agents are not cognizable under Bivens, but may only be brought against the federal government itself under the Federal Tort Claims Act ("FTCA"). The United States is the only proper defendant in an FTCA action. See United States v. Smith, 499 U.S. 160, 167 n.9 (1991); Allgeier v. United States, 909 F.2d 869, 871 (6th Cir. 1990). Oxendine's complaint thus cannot be construed as having been brought under the FTCA. Regardless, Oxendine maintains that his claim should be viewed as a Bivens claim rather than a FTCA claim.
5. In his second amended complaint, Oxendine also asserted that he had been subjected to retaliation as a result of his filing the instant lawsuit. The district court did not address Oxendine's retaliation claims in its Order dismissing the complaint. Oxendine does not challenge the dismissal of his retaliation claim anywhere in his opening brief, however, and instead challenges only the district court's ruling that Defendants' conduct did not result in a violation of Oxendine's constitutional rights. We therefore deem the retaliation issue waived and decline to address it on appeal. See Harris v. Champion, 51 F.3d 901, 905 (10th Cir. 1995).
6. The Due Process Clause of the Fourteenth Amendment "prohibits any State from depriving a person of life, liberty, or property without due process of law." See Meachum v. Fano, 427 U.S. 215, 223 (1976). "The Due Process Clause standing alone offers prisoners only a 'narrow range of protected liberty interests,'" see Abbott v. McCotter, 13 F.3d 1439, 1442 (10th Cir. 1994) (quoting Hewitt v. Helms, 459 U.S. 460, 467 (1983)), and we do not believe Oxendine's claim that he was provided inadequate and delayed medical care falls within that "narrow range."
7. Defendants argue that Oxendine's claim is not truly a constitutionally cognizable claim that delay in receiving qualified medical care caused him substantial harm, but is instead based upon a mere disagreement with Dr. Kaplan regarding the appropriate time at which a specialist should have been brought in to examine Oxendine's reattached finger. The government seems to find dispositive the fact that Oxendine received at least some treatment from Dr. Kaplan during the time period when he alleged that he received inadequate and delayed medical care. While it is true that "a prisoner who merely disagrees with a diagnosis or a prescribed course of treatment does not state a constitutional violation," Perkins, 165 F.3d at 811, we do not believe this case involves mere disagreement between the parties. Accord Hunt, 199 F.3d at 1223-24 (holding that a prisoner's claim that he was denied adequate and timely medical assistance did not reflect "mere disagreement with his medical treatment,"and that "the fact that he has seen numerous doctors [does not] necessarily mean that he received treatment for serious medical needs, i.e., that treatment was prescribed at all or that prescribed treatment was provided").
8. "Necrosis" is defined as the "death of living tissue: as . . . death of a portion of animal tissue differentially affected by loss of blood supply, corrosion, burning, the local lesion of a disease (as tuberculosis), or other local injury." See Webster's Third New International Dictionary 1511 (1986).
9. The portion of Oxendine's medical chart that was attached to his complaint includes notations on unrelated health issues dated March 23, 1999, and March 24, 1999. The chart thus includes information for the two days following the initial observation of necrosis by Dr. Kaplan, and there is no mention of referring Oxendine to an outside medical specialist for his severed finger on either of those days.

matches: v. v. v. v. v. v. v. v. v. v. v. v. v. v. v.


THE TALBOTS, INC. vs. COMMISSIONER OF REVENUE.
Present: RAPOZA, C.J., CYPHER, & GREEN, JJ.
Taxation, Corporation, Related corporations, Corporate excise. Corporation, Subsidiary, Corporate disregard.
The Appellate Tax Board (board) correctly affirmed the denial by the Commissioner of Revenue (commissioner) of a taxpayer's request to abate corporate excise taxes that were assessed against the taxpayer on the basis of disallowed deductions for royalty payments the taxpayer made to a wholly owned subsidiary for the use of intellectual property, where sufficient evidence supported the board's finding that the commissioner properly disregarded, under the "sham transaction doctrine," the transfer and licensing of the intellectual property between the taxpayer and the subsidiary [161-166]; further, the board correctly affirmed the commissioner's reattribution of the royalty and interest income earned by the subsidiary to the taxpayer, where the taxpayer controlled the intellectual property from which the income was generated, and in fact received substantially all of the income .
John S. Brown (Matthew D. Schnell & Donald-Bruce Abrams with him) for the taxpayer.
Andrew P. O'Meara for Commissioner of Revenue.
RAPOZA, C.J. The Talbots, Inc. (Talbots), appeals from a decision of the Appellate Tax Board (board) affirming the refusal of the Commissioner of Revenue (commissioner) to abate certain corporate excise taxes assessed against Talbots. The contested assessments arise from disallowed deductions for royalty payments made by Talbots to a wholly owned subsidiary for the use of various intellectual property. The board found that the transfer and licensing of the intellectual property between Talbots and its subsidiary constituted a sham that could be disregarded pursuant to the "sham transaction doctrine." We affirm.
Background. Talbots is a Delaware corporation headquartered in Massachusetts and engaged in the sale of women's apparel, shoes, and accessories. In 1988, Talbots was sold to Jusco (USA), Inc., and Talbots's trademarks, trade names, and other intellectual property (collectively, marks) were sold to Jusco BV, a wholly owned subsidiary of Jusco (USA), Inc., and leased back to Talbots in return for a royalty payment. In 1993, in anticipation of its initial public offering (IPO), Talbots was advised to reacquire the marks. After discussion between Talbots and outside firms, it was decided that the most advantageous way for Talbots to reacquire the marks was for a wholly owned subsidiary to purchase the marks and license them to Talbots. In 1993, The Chicago Classics, Inc. (TCC), was incorporated in Delaware for this purpose.
Using the proceeds of the IPO, Talbots made a capital contribution to TCC of $1 million and a loan of $102 million. This money was used by TCC to purchase the marks from Jusco BV. Talbots and TCC then entered into an agreement pursuant to which Talbots obtained a nonexclusive license to use the marks in return for an annual royalty payment to TCC based on a percentage of net sales. During the years at issue in this appeal (1994 through 2001), TCC licensed the marks only to Talbots or a Talbots subsidiary, and not to any independent third party.
A Talbots employee advised that the use of debt to capitalize TCC would allow for an easier transfer to Talbots of the money TCC received as royalty payments. As noted, supra, debt made up more than ninety-nine percent of TCC's capitalization (a $102 million loan and a $1 million capital contribution). TCC repaid to Talbots ninety-six percent of the royalty payments it received in the tax years at issue in the form of principal and interest on the $102 million loan, payments for Federal income tax liability, dividends, and an undocumented loan of $8.5 million. Other than the royalty payments from Talbots and certain Talbots affiliates, TCC's only source of income was the interest it received when it deposited the royalty payments. The total interest income earned by TCC for the eight years in question amounted to $825,348, a return rate of approximately 0.21 percent.
with two independent contractors: Maureen Doyle, who provided bookkeeping services, and Attorney Suzanne Saxman, who approved expenditures, transferred funds, signed checks, and reviewed the bookkeeping procedures. Doyle received between $200 and $315 per month from TCC during the years at issue. Saxman was not paid directly by TCC, but rather, her law firm would bill TCC for her time. A Talbots executive testified that "[t]here is no one there" at TCC to make decisions. Instead, decisions were made by various Talbots employees, who had to approve invoices before Saxman was allowed to make payments.
Based on the foregoing, the commissioner adjusted Talbots's taxable income for tax years 1994 through 2001 by disallowing the deductions Talbots claimed for the royalties it paid to TCC for use of the marks, and by reattributing to Talbots the royalty and interest income earned by TCC. With one exception not before us (A.T.B. Docket No. C266698), the board affirmed the commissioner's denial of Talbots's request for abatement of corporate excise taxes for the years at issue, finding that the transfer and licensing arrangement between Talbots and TCC was a sham transaction. Talbots now appeals pursuant to G. L. c. 58A, § 13.
Discussion. This appeal presents two questions, the latter dependent on our answer to the first. First, whether there is sufficient evidence to support the board's finding that the transfer and licensing agreement was a sham transaction and, therefore, whether the commissioner properly disallowed the deductions Talbots claimed for its royalty payments to TCC. Second, if there was sufficient evidence to disallow the deductions, whether it was proper to reattribute to Talbots royalty and interest income earned by TCC during the years at issue.
a necessary inference from the findings.' " Ibid., quoting from Olympia & York State St. Co. v. Assessors of Boston, 428 Mass. 236 , 240 (1998).
The sham transaction doctrine allows the commissioner "to disregard, for taxing purposes, transactions that have no economic substance or business purpose other than tax avoidance." [Note 1] Sherwin-Williams Co. v. Commissioner of Rev., 438 Mass. 71 , 79-80 (2002) (Sherwin-Williams), quoting from Syms, 436 Mass. at 509-510. A viable business entity, within the context of the sham transaction doctrine, is "one which is 'formed for a substantial business purpose or actually engage[s] in substantive business activity.' " Sherwin-Williams, supra. at 84, quoting from Northern Ind. Pub. Serv. Co. v. Commissioner of Int. Rev., 115 F.3d 506, 511 (7th Cir. 1997). "The question whether or not a transaction is a sham for purposes of the application of the doctrine is, of necessity, primarily a factual one, on which the taxpayer bears the burden of proof in the abatement process." Syms, supra at 511 (footnote omitted).
The board's findings here are supported by sufficient evidence. Indeed, the facts of the instant case are similar to the facts in Syms, in which the Supreme Judicial Court upheld the board's denial of the parent corporation's abatement applications on the basis of the sham transaction doctrine. Moreover, the present facts contrast with those in Sherwin-Williams, in which the Supreme Judicial Court reversed the board's finding that the transfer of intellectual property to a subsidiary constituted a sham transaction.
The parent company in Syms formed a subsidiary to hold its intellectual property and paid the subsidiary a royalty for its use. Id. at 507. The subsidiary would hold the royalty payment, which was its only income, for a few weeks and then pay it back to the parent in the form of a tax-free dividend. Id. at 509.
The subsidiary had only one part-time employee who earned $1,200 per year, and its corporate office was an address rented from an accounting firm. Ibid. After the transfer and the license-back, the parent continued to maintain and protect the good will and value of the intellectual property. Ibid. The parent also continued to control (and pay for) advertising and was responsible for quality control. Ibid. Citing these facts, the Syms court affirmed the board's finding that the transfer of the intellectual property to the subsidiary was a sham and could be disregarded pursuant to the sham transaction doctrine. Id. at 512-513.
The court in Sherwin-Williams reversed the board's finding that the transfer and license of intellectual property between the parent and its subsidiaries constituted a sham transaction, and identified four key facts as evidence of the subsidiaries' substantive business activity. Sherwin-Williams, 438 Mass. at 86. First, the benefits and the burdens of owning the intellectual property passed to the subsidiaries. Ibid. Second, the subsidiaries "entered into genuine obligations with unrelated third parties for use of the" intellectual property. Ibid. Third, the subsidiaries invested the royalty payments they received and earned additional income. Ibid. And, finally, the subsidiaries "incurred and paid substantial liabilities to unrelated third parties and [the parent company] to maintain, manage, and defend" the intellectual property. Ibid.
In the instant case, as in Syms, TCC repaid almost all (ninety-six percent) of the royalty payments it received from Talbots. TCC did not invest the income from Talbots's royalty payments into its business and did not earn any additional income (apart from interest income on the royalty payments at the rate of 0.21 percent). Contrast Sherwin-Williams, 438 Mass. at 81 (proceeds from parent company's royalty payments were not returned to parent, but were "retained and invested as part of [the subsidiary's] ongoing business operations, earning significant additional income"). TCC had no employees and Talbots controlled TCC's operations. During the years at issue, TCC never entered into a license agreement with any independent third parties. Contrast ibid. ("The subsidiaries entered into nonexclusive license agreements not only with [the parent corporation], but also with unrelated parties"). At all relevant times, Talbots had full use and control of the marks. See Syms, 436 Mass. at 509.
See also IDC Research, Inc. v. Commissioner of Rev., 78 Mass. App. Ct. 352 , 355 (2010) ("the transactions . . . lacked economic substance or effect because [the parent company] retained full use and control of the world logo and the benefits and burdens of its ownership"). Moreover, a Talbots executive admitted that "[t]here is no one" at TCC to make decisions. Instead, decisions, including which bills and expenses TCC should pay, were made by Talbots. Contrast Sherwin-Williams, supra at 87-88 (parent company relinquished control over monies it paid to subsidiaries as royalties and subsidiaries paid their own expenses). The fact that TCC maintained a business address but had no employees suggests "a business in form only." IDC Research, Inc., supra at 356. Nor does "merely opening a bank account" under the TCC name constitute a substantive business activity. Ibid.
The record also contains several letters and memoranda from Talbots employees and outside advisors which reveal that the transfer and licensing arrangement here "was specifically devised as a tax avoidance scheme." Sherwin-Williams, 438 Mass. at 80. One of these documents refers to the need "[t]o give this structure credibility" by establishing an office where royalty payments could be mailed and hiring a part-time employee to receive, record, and deposit these payments. In a different document, the sole reason stated for establishing a subsidiary to hold the marks is to receive "a reduced state tax burden." The record also contains a document written by a Talbots employee containing a warning that Talbots and its to-be-formed subsidiary (ultimately, TCC) must remain as separate as possible. The document contains a list of ways that Talbots could avoid unnecessary links to the new subsidiary, including not using "Talbots" in the name and electing board members who are not on the Talbots board. Finally, in a different interoffice memorandum, the same Talbots employee states, "If we cannot give the new company the appearance of operating independently, the states will not view it as operating independently."
Talbots's arguments in support of its claim that it is entitled to deduct the royalty payments made to TCC are unavailing. Talbots first argues that there was a substantial business purpose, aside from tax avoidance, for TCC to acquire the marks and lease them to Talbots: the IPO. This argument is without merit.
There is no dispute that Talbots's desire to facilitate the IPO was a legitimate reason for it to acquire the marks. But the record is devoid of any evidence of business purpose, save for a tax benefit, to explain why Talbots chose to acquire the marks through the use of a wholly owned subsidiary. As such, Talbots did not meet its burden of proving a purpose for the transfer of the marks to TCC other than tax avoidance.
Talbots next argues that its arrangement with TCC did not involve an attempt to create a new deduction because Talbots already had been deducting royalty payments it made to Jusco BV before TCC purchased the marks from Jusco BV. This argument also fails. Indeed, regardless of what arrangement existed previously, we are concerned in this appeal only with determining whether there was a business purpose beyond tax avoidance for Talbots, which wanted to acquire the marks from Jusco BV in order to facilitate its IPO, to set up a subsidiary to own the marks. The board found that there was no such purpose and substantial evidence supports that finding.
Citing Sherwin-Williams, 438 Mass. at 89-90, Talbots also argues that the board gave improper weight to its motivation for establishing a subsidiary to own the marks. The court in Sherwin-Williams held that "tax motivation is irrelevant where a business reorganization results in the creation of a viable business entity engaged in substantive business activity rather than in a 'bald and mischievous fiction.' " Id. at 89, quoting from Moline Properties v. Commissioner of Int. Rev., 319 U.S. 436, 439 (1943). Here, the board found, and the evidence supports, that TCC was not a viable business entity engaged in substantive business activity apart from the creation of tax benefits for Talbots. Therefore, Talbots's tax motivation was relevant and the board did not err in citing it as one factor, of several, in support of its finding that the transfer and license back of the marks was a sham transaction.
acquired and then licensed the Talbots [m]arks lacked economic substance and business purpose aside from state tax avoidance." As such, the commissioner properly disallowed the royalty payment deductions claimed by Talbots for tax years 1994 through 2001.
2. Reattribution of income to Talbots. Having answered the first question -- whether the sham transaction doctrine was properly invoked in disallowing the royalty payment deductions claimed by Talbots -- in the affirmative, we turn now to the question whether it was proper to reattribute certain income earned by TCC to Talbots. The income at issue is the investment income that TCC earned from investing the royalty payments it received and also income from royalty payments received by TCC from Talbots affiliates (but not Talbots itself). The board held that "[b]ecause the Talbots [m]arks were still controlled by Talbots, the income that their royalties generated, including any investment income earned from investments pursuant to Talbots's dictate, was also taxable to Talbots."
Talbots argues that TCC is the legal owner of the marks and, therefore, any income derived from ownership of the marks can be attributed only to TCC. This argument is inconsistent with our conclusion that the board properly found that TCC's acquisition and ownership of the marks was a sham within the meaning of the sham transaction doctrine. As such, TCC was properly disregarded as the owner for tax purposes.
The board correctly reattributed the interest and royalty income to Talbots, the beneficial owner of that income for the tax years at issue. Having disregarded TCC's corporate form, the board properly treated Talbots, the parent company, as if it owned the marks because Talbots both controlled them and, in fact, received substantially all of the income generated by the marks. Indeed, "[i]t is command of income and its benefits which marks the real owner of property." IDC Research, Inc., 78 Mass. App. Ct. at 361 (also applying sham transaction doctrine), quoting from Higgins v. Smith, 308 U.S. 473, 478 (1940).
Decision of Appellate Tax Board affirmed.
[Note 1] As the Supreme Judicial Court explained in Sherwin-Williams Co. v. Commissioner of Rev., 438 Mass. 71 , 80 n.6 (2002), the sham transaction doctrine applies to " 'shams in substance,' i.e., transactions that really occurred but are alleged to lack the substance their form represents," as opposed to " 'shams in fact,' i.e., transactions that never occurred." There is no dispute here that the marks were in fact transferred to and are owned by TCC; the question before us is whether this transaction had a substantial business purpose other than tax avoidance.


text:
If asked to name the world’s number one fruit (based on tons produced), most individuals would probably guess banana, orange or apple. While all of the previous are very important, none can rival the amount of grapes produced throughout the world. The varieties of ways in which grapes can be used coupled with the number of countries in grapes can be grown accounts for the fact the world produces about 72 million tons of grapes annually. Late August signals the beginning of grape harvest for many regions of Missouri and is a good time to take a closer look at this ancient fruit.
Grape culture (or viticulture) is probably as old as civilization itself. Archeological evidence suggests humans began growing grapes as early as 6500 B.C. during the Neolithic era. By 4000 B.C., grape growing extended from Transcaucasia to Asia Minor and through the Nile Delta of Egypt. King Hammurabi of Babylon probably enacted the world’s first liquor law when he established rules for wine trade in 1700 B.C.
At the time of the fall of the Roman Empire, grape culture and wine making primarily were associated with monasteries. Later, the use of wine extended beyond religious rites and became entrenched in culture as a social custom. This increased demand for grapes, and grape culture grew steadily from the 16th to the 20th century.
The world produces about 7.2 trillion gallons of wine each year, making it by far the most prevalent use of grapes. This value represents a 35% increase since the mid-20th century; Europe (Italy, France, Spain and Russia) accounts for 80% of total world production. Only about 14% of the wine produced worldwide is exported from its country of origin.
Raisins represent a formidable use of grapes as well. World-wide raisin production averages 800,000 tons per year. Since it takes about four pounds of grapes to produce one pound of raisins, the raisin industry uses about 3.2 million tons of grapes each year.
Not all of the grapes consumed worldwide belong to the same species. Grapes belong to the Vitaceae family which contains 11 genera and about 600 different species. The genus Vitus is the only food bearing genus in the Vitaceae family and contains about 60 different species. These species are grouped into one of four different categories.
Native Grapes. When the first Europeans visited North America they found grapes growing so abundantly that they named the new land “vineland”. Grape species native to North America include V. labrusca, V. aestivalis, V. riparia, V.berlandieri. Native species are known for their cold hardiness and disease resistance. Unfortunately, their fruits have lower sugar content, higher acid content (a poor combination for making good wine) and are “slip skin”. The latter term refers to the tendency of the skin to separate from the remainder of the berry when eaten fresh. ‘Concord’, a cultivar with V. labrusca parentage, arguably is the most popular American-derived grape. Fanciers of ‘Norton’ (‘Cynthiana’) could make a formidable argument for their cultivar.
Early settlers often described native grapes as having an “animal den” aroma. Hence, throughout the history of our nation native grapes often were referred to as “fox grapes”. Science has revealed that V. labrusca and cultivars derived from that native species contain methyl anthranilate, an earthy, musky smelling compound that (to most) imparts a disagreeable after-taste. Interestingly, science also demonstrated recently that methyl anthranilate is contained by secretions of the musk glands of foxes and dogs. Evidently, our fore-father had a very acute sense of smell.
European Grapes. The European grape (V. vinifera) is the species most often associated with the word “grape” and accounts for the majority of the world’s wine production. The chemical composition of its fruits is superior to that of native grapes for winemaking, but European grape cultivars lack cold hardiness and are susceptible to a number of troublesome diseases. Columbus is credited with having introduced European grape to the Americas but the colonists’ first attempts to grow it resulted in failure due to its sensitivity to cold temperatures. Today, production of V. vinifera in the United States is limited to regions with mild winters, long growing seasons and summers that are fairly dry with low relative humidity.
French-American Hybrids. The quest to produce grapes with superior wine-making qualities coupled with cold hardiness and disease resistance led to the development of French-American hybrids. Most arose by crossing species of European grape with various species of North American grape. These crosses gave rise to very productive hybrids having adequate cold hardiness to be produced in the Midwest along with the ability to tolerate many troublesome diseases. Indeed, it was French-American cultivars such as ‘Chambourcin’, ‘Vidal Blanc’, ‘Seyval Blanc’, ‘Chardonel’ and ‘Vignoles’ that led to the recent revitalization of Missouri’s wine industry. In the development of these hybrids, V. labrusca purposefully was avoided as a parent to prevent it from passing it “foxy” flavor to its progeny.
Muscadine Grapes. Muscadine grapes (V.rotundifolia) are noted for their small berries that have a bold, musky flavor. They are nearly immune to insects and diseases but require a growing season of 200 days or more. Muscadine grape production is limited to states such as Florida, Mississippi, Louisiana and North Carolina, all of which have mild winters.
Grapes are fairly robust in their growth habit and have the ability to tolerate a wide range of soils, including those that are shallow and rocky. Detailed information on the cultural requirements of grapes in Missouri can be found in MU Extension publications G6085 (Home Fruit Production: Grape Culture) and G6090 (Home Fruit Production: Grape Training Systems).
Botanically, grapes are considered to be a berry.
The oldest grapevine in America is a 400 year old Muscadine vine in North Carolina.
The grape industry contributes about $125 billion annually to the U.S. economy.
The average American consumes eight pounds of grapes each year.
About 25 percent of the grapes eaten in the U.S. are imported from Chile.
The best selling grape in the U.S. is ‘Thompson Seedless’ which also is the source of golden raisins.
Grapes are a good source of vitamins C and K; they also contain protein, carbohydrates, dietary fiber and minerals.
Resveratrol, a substance found in grapes, has been linked to reduced colon cancer.

matches: V. V. V. V. V. V. V.


India is a hub of Information Technology, with an unprecedented boost in the development of innovative technologies. With breakthrough technological inventions and development of software in past years, it became paramount to protect the innovation and safeguard the interest of inventors. Fortunately, patent laws in India help in protecting one’s invention and software are no different. The Indian Patent Office has laid out Computer Related Invention Guidelines to streamline the process of obtaining a software patent in India.
A Patent an exclusive right granted to a person who has invented some new and useful article. an improvement of existing article or a new process of making some article. Patent laws in India ensure that no other person can make, use, distribute or sell any commodity which uses this product or process by granting patent rights to the inventor.
The Indian Patents Acts 1970 governs all aspects of the patent in India, including what can and cannot be patented, guidelines for obtaining a patent, procedure for obtaining a patent, tenure of a registered patent, etc. Section 3(k) of the Indian Patents Act, 1970 reads that ‘mathematical or business method or a computer programme per se or algorithms’ do not fall under the category of items that can be patented in India. Therefore, the Patent Office has been rejecting the majority of patent applications for software patent in India, even though they are high on innovation.
Software has traditionally been protected under copyright law since code fits quite easily into the description of a literary work. Thus, Software is protected as works of literature under the Berne Convention, and any software written is automatically covered by copyright. This allows the creator to prevent another entity from copying the program and there is generally no need to register code in order for it to be copyrighted. While Software Patenting has recently emerged (if only in the US, Japan and Europe) where, Patents give their owners the right to prevent others from using a claimed invention, even if it was independently developed and there was no copying involved.
Further, it should be noted that patents cover the underlying methodologies embodied in a given piece of software. On the other copyright prevents the direct copying of software, but do not prevent other authors from writing their own embodiments of the underlying methodologies.
The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), particularly Article 27, are subject to debate on the international legal framework for the patentability of software, and on whether software and computer-implemented inventions should be considered as a field of technology.
However, there have been no dispute settlement procedures regarding software patents. Its relevance for patentability in the computer-implemented business methods, and software information technology remains uncertain, since the TRIPs agreement is subject to interpretation.
Within European Union member states, the EPO and other national patent offices have issued many patents for inventions involving software since the European Patent Convention (EPC) came into force in the late 1970s. Article 52 EPC excludes “programs for computers” from patentability (Art. 52(2)) to the extent that a patent application relates to a computer program “as such” (Art. 52(3)).
This has been interpreted to mean that any invention which makes a non-obvious “technical contribution” or solves a “technical problem” in a non-obvious way is patentable even if a computer program is used in the invention. Computer-implemented inventions which only solve a business problem using a computer, rather than a technical problem, are considered unpatentable as lacking an inventive step. Nevertheless, the fact that an invention is useful in business does not mean it is not patentable if it also solves a technical problem.
The Patent Cooperation Treaty (PCT) is an international patent law treaty, which provides a unified procedure for filing patent applications to protect inventions. A patent application filed under the PCT is called an international application or PCT application. Under the PCT, the international search and the preliminary examination are conducted by International Searching Authorities (ISA) and International Preliminary Examining Authority (IPEA).
The issues involved in conferring patent rights to software are, however, a lot more complex than taking out copyrights on them. Specifically, there are two challenges that one encounters when dealing with software patents. The first is about the instrument of patent itself and whether the manner of protection it confers is suited to the software industry. The second is the nature of software, and whether it should be subject to patenting.
However, issues involved in conferring patent rights to software are a lot more complex than taking out copyrights on them. Specifically, there are two challenges that one encounters when dealing with software patents. The first is about the instrument of patent itself and whether the manner of protection it confers is suited to the software industry. The second is the nature of software and whether it should be subject to patenting.
The Indian Patent Office (IPO) recently modified the Computer-Related Inventions Guide lines in June 2017 by removing the requirement of ‘novel hardware’ to get a software patented in India. The amended guidelines have deleted one of the three steps from the test for patentability which stipulated that patents for software could only be claimed in conjunction with novel hardware. However, the requirement of some hardware remains the same to obtain a software patent in India.
The claim is denied if the contribution lies only in mathematical method, business method or algorithm.
Check if the patent is claimed in conjunction with a novel hardware if the contribution lies in the field of the computer programme.
Under the new CRI guidelines, the IPO has taken a more favourable approach towards patentability of CRIs as compared to the past. The revised guidelines are useful to patent applicants and practitioners alike. When it comes to getting a patent in India, computer-related inventions can be really tricky. It is important to clearly describe the invention in such a manner that it is easily comprehensible to laypersons.
1. Method to compress or process data, video, image or audio.
3. A method of improving a machine or memory operation.
4. A Method of improving physical, chemical, biological or electric properties of an object.
5. A Graphical User Interface controlling system.
6. A Mobile Unit positioning method.
1. An abstract idea, computer programme or code.
With the latest amendment, the IPO shall gear up to receive numerous applications from many companies and start ups that have their base in software. Experts also speculate an acute decrease in the number of patent litigation that has been stalling the progress of Indian software fraternity.
Technology related patents (which are not in relation to hardware) are usually categorized as software patents or business method patents. For example, a system or process developed by a taxi company which allows any customer to choose a taxi which is closest to his location could qualify as a business method.
The Indian Patent Act,1970 governs all aspects of the patent in India, including what can and cannot be patented, guidelines for obtaining a patent, procedure for obtaining a patent, tenure of a registered patent, etc. Section 3(k) of the Indian Patents Act, 1970 reads that mathematical or business method or a computer programme per se or algorithms’ do not fall under the category of items that can be patented in India. Therefore, the Patent Office has been rejecting the majority of patent applications for software patent in India, even though they are high on innovation.
1. Industrial Applicability: – “capable of industrial application”, in relation to an invention, means that the invention is capable of being made or used in an industry.
2. Inventive Step:-“inventive step” means a feature of an invention that involves technical advancement as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art.
3. Novelty:-“new invention” means any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of patent application with complete specification, i.e., the subject matter has not fallen in public domain or that it does not form part of the state of the art.
4. Patentability exclusion for software or computer program:-Mathematical business method computer programme per se or algorithms.
Patentability exclusion for software or computer program specifically elucidates subject matter which is novel or new product or process, having an inventive step and capable of industrial application qualify for patent if it falls under Section 3(k) of the Indian Patents Act, 1970. Nevertheless, not all computers related invention falls under Section 3(k) or that computer-related inventions which are outside the scope of Section 3(k) are patentable in India. For instance, if the main essence or contribution or function of the proposed invention lies solely in the computer program, the invention is not patentable as per Section 3(k) of the Patents Act, 1970. Conversely, if the main essence or contribution or function of the proposed invention lies the computer program as well as hardware, the invention will not fall under Section 3(k) and shall be judged on other criteria of patentability.
In Accenture Global Service GMBH v. Assistant Controller of Patents & Design where applicant sought for a patent on a method to generate a data mapping document. The objection against the method’s technical effect being unidentifiable, the applicant submitted that the present claims recite “technical solution to a technical problem of the need for a data document design system and design tools that addresses one of the most important technical challenges faced by database systems is data migration.” After analyzing the inventions on merits, the Patent Office observed that the invention is not software per se, it is rather a system having web-services and software and thus, is not falling in the category of section 3(k) and patent was granted in May 2013.
In 2009, Facebook sought a patent on a method “for generating dynamic relationship-based content, personalized for members of the web-based social network”. The objections against the grant were ‘the method being nothing but an algorithm implemented through software thus falling under Section 3(k) and being non- patentable.’ The applicant contended that section 3(k) was not applicable in this case because the invention “implements a technical process and has a technical effect” and further went on to explain the intricacy of the method. These amendments to the claims satisfied the Patent Office’s objections and thus it granted the patent in February 2017.
Another patent was granted to Facebook on 25thApril 2017 “for a method of providing access to user profile data maintained by Facebook to third-party application”. Facebook submitted that “the present invention included hardware limitation and provided technical improvements and benefits like checking privacy setting associated with the user profile and based on the privacy setting the access is provided to the third-party application and the third-party application personalizes the user content data.” The Patent Office concluded that this doesn’t fall under the purview of Section 3(k), and duly granted it a patent.
In Feb 2005, Google sought for a patent on an invention titled, ‘phrase identification in an information retrieval system’. One of the claims disclosed it to be a basic mathematical algorithm with the logical steps thus falling under section 3(k) of the Patents Act, 1970 and therefore not being patentable. However, Google reasoned that its invention is not an algorithm or a computer program per se, “but provides a technical solution to a technical problem of how to automatically identify phrases in a document collection”. It claimed that the technical solution i.e. the end product which is an index, stored in a memory consisting of related valid phrases, is inventive. On hearing the above submissions, the Patent Office concluded that it is “a technical advancement over the prior art” and thus granted it the patent in May 2017.
In 2009, Apple applied for a patent on a ‘method for browsing data items with respect to a display screen associated with a computing device and an electronic device’. The objections against the invention were that it was merely a software program and thus falling within the scope of computer programs per se i.e., under the provision of section 3(k) of the Act. Apple submitted that the method “although the steps of the method can be performed by means of software, the method constitutes a practical application of this computer software to produce a useful result bringing an improved technical effect while presenting advantages and overcoming drawbacks of hitherto known techniques.” Accepting this submission, the Kolkata Patent Office granted the patent.
Mathematical or business method or a computer programme per se or algorithms.
Literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever including cinematographic works and television productions.
Mere scheme or rule or method of performing mental act or method of playing game.
Presentation of information.opography of integrated circuits.
In Europe, the European Patent Convention (EPC) (Art. 52(c) and state that a computer program claimed such us excluded from patentability. But an appeal by before the board of appeals for the european patent office provided useful guidance. The Board stated that a narrow reading of the relevant articles meant that not all computer programs should be excluded from patentability to comply with Art. 27 of the TRIPS Agreement which deals with the patentable subject matter. The Board concluded that a computer programs as such referred only to those that were non-technical in character. It also acknowledged that “it does not make a difference whether a computer program is claimed by itself or as a record on a carrier. In other words, as long as a computer program is technical, the medium in which it is recorded is irrelevant and is, in fact, patentable. Given the current widespread online commercial distribution of software, this is an especially important finding.
In the United States, patent protection for software-related inventions is limited to those on recordable media, not to computer programs themselves. This protection falls short when it comes to the online distribution of software. Unfortunately, the Supreme Court’s decision in Alice Corp v. CLS Bank and some subsequent cases have failed to provide clear boundaries for the patent eligibility of software-related inventions.
With respect to computer software, in Patents (Amendment) Act, 2002, the scope of non-patentable subject matter in the Act was amended to include the following: “a mathematical method or a business method or a computer programme per se or algorithms”.
However, the recent amendment changes (Ordinance, 2004), which amends the Patents Act, 1970, has been promulgated after receiving assent from the President of India and has came into effect from 1st Jan., 2005. Apart from change in pharmaceuticals and agro chemicals, one of the seminal amendments this Ordinance seeks to bring is to permit the patenting of embedded software.
Hence, the amendment means that while a mathematical or a business method or an algorithm cannot be patented, a computer programme which has a technical application in any industry or which can be incorporated in hardware can be patented. Since any commercial software has some industry application and all applications can be construed as technical applications, obviously it opens all software patenting.
Therefore, it is important that the software sought to be protected is not merely a new version or an improvement over an existing code.
Further, in accordance with the specific requirements of the Ordinance with regard to patentability of software, the software should necessarily have a technical application to the industry or be intrinsic to or “embedded” in hardware. This is to prevent against any future litigation or claims of infringements being raised, which is a distinct probability even after a patent has been granted.
India for its part seems to have adopted the more conservative approach of the European patenting norms for software. But the Ordinance definitely has its use and relevance in today’s India, particularly for our growing domestic semi- conductor industry. This, along with judicial tempering might definitely ensure a judicious use of patent protection while allowing the industry to grow through innovations and inventions, thereby, mitigating the risks of trivial patents chocking the life out of real innovations and inventions. This is the reason a patent should always be treated as a “double edged sword”, to be wielded with caution and sensitivity. Now whether, in reality this will be implemented on a rigid basis or will become broad in scope through application (as in the U.S.), and, more importantly, whether the Ordinance would, in fact, result in increased innovation and inventions in the software industry, remains to be seen.
Cloud Computing Patents within this background of development and innovation, Companies and individuals are seeking patent protection for cloud computing inventions. These inventions can present unique challenges to patent drafters who seek to obtain adequate coverage and protection for these inventions. Some of these challenges will be discussed herein, but first a fundamental understanding of these kinds of patents is required.
Cloud computing is the delivery of computing services, servers, storage, databases, networking, software, analytics and more over the Internet (“the cloud”). Companies offering these computing services are called “Cloud Providers” and typically charge for cloud computing services based on usage, similar to how you are billed for water or electricity at home.
Cloud service providers usually build several data centres around the world, and then use these facilities to provide services to customers from different countries. The globalization benefits of cloud computing, together with other benefits such as virtualization and scalability, enabled fast growth and adaption of the cloud computing technology by various organizations.Since, there are no all encompassing international or global patents (a US filed patent application is only valid in the USA and an EU patent in Europe), PAE and NPE cannot just file their claims in one country, but need to file in several countries where the servers are located or at least enforce their obtained judgments in those countries. Also,the forum shopping is a frequently used term in this context: i.e. litigants file their law suits in the Court thought most likely to provide a favourable judgment.
Switzerland is a key jurisdiction for enforcement, since it is a party to many international IP treaties (e.g. Patent Cooperation Treaty, European Patent Convention, Patent Law Treaty, etc.).Recognition of foreign arbitral awards does usually not trigger any particular issues in Switzerland, which is widely recognized as an arbitration friendly forum. The Swiss Federal Supreme Court adopts a very narrow interpretation of public policy and refrains from re-examining the merits of foreign arbitral awards. But also the Swiss Federal Patent Court which has exclusive jurisdiction over patent infringement and invalidity actions is known for its expedite procedures. Another benefit is that the parties can agree on conducting the proceedings in English.
Eventually, the soon to be implemented unitary patent concept with a single Court (the Unified Patent Court) and uniform protection which means that revocation as well as infringement proceedings are to be decided for the unitary patent as a whole rather than for each country individually, will also likely to lead to increased patent litigation in Europe.
cloud computing IP risks have had little public airing so far is probably that, while implicitly acknowledged, they have yet to be thoroughly expressed and articulated. For example, in UK financial services, now one of the most heavily regulated sectors, cloud computing is treated as outsourcing and in its cloud guidance, the FCA (Financial Conduct Authority, the UK regulator states that regulated firms should“identify and manage any risks introduced by their [cloud] arrangements. Accordingly firms should carry out a risk assessment to identify relevant risks and identify steps to mitigate them, document this assessment, identify current industry good practice … assess the overall operational risks, monitor concentration risk and consider what action it would take if the provider failed.
IP risks are not called out expressly but this is clear guidance that firms must identify, assess and plan for all relevant risks including service availability failure, which could of course crystallise due to IP risks.
NPEs are arming for offensive patent action in the cloud, stocking up their armouries and probing for weakness and opportunity. Cloud software patent risks have emerged on to the business agenda and are likely to become increasingly prominent for CSPs , cloud users and regulators alike.
As the public cloud services market continues to mature and grow the concentration of computing resources into cloud data centres is increasingly attracting the attention of NPEs as a target for patent litigation. At a time when data security and privacy risks are front of mind for cloud service providers (CSPs) and their users, the intellectual property (IP) risks to cloud service availability posed by NPE patent claims are rising up the business agenda.
PEs (Non-Practising Entities) are businesses that assert patents through litigation to achieve revenues from alleged infringers without practising or commercialising the technology covered by the patents they hold. NPEs are uniquely well placed to monetise their patents at each stage of the litigation cycle. They have access to capital and all necessary forensic and legal resources; and an NPE doesn’t practise its patents, so is immune to a counterclaim that a defendant might otherwise be able to bring against a competitor, or a cross-licence that the defendant could otherwise offer.
NPEs’ activities may attract attention as arbitraging the patent system, but that is to miss the point: the defendant in a patent claim brought by an NPE generally has an unattractive real-world choice between the cost and distraction of litigation and the cost of settlement which, whilst low in relation to likely litigation costs, is high relative to the perceived merits of the claim. Whilst recent US cases have made it more difficult to patent and enforce computer-implemented inventions, cloud-based software patent litigation is increasing: NPEs appear to have doubled down over the last five years, acquiring more cloud patents for their armoury as well as filing more patent cases.
From the NPE’s standpoint this makes sense. Claiming that software in the CSP’s PaaS (Platform as a Service) or IaaS (Infrastructure as a Service) infringes the NPE’s patents can be an efficient way to threaten alternative objectives: the CSP risks an injunction stopping it from using the software that embodies the patented technology; and the CSP’s customers using that software also face disruption as they may be liable both for their own workloads and for their CSP’s infringing code that they use.
Software contracts, like many other transactions, are governed by the common law principles as embodied in the Indian Contract Act. Contracts can be in the nature of sale or assignment/licence. If the computer software is considered as a ‘good’, the Sale of Goods Act, 1930 will have relevance in the formation and execution of the sale contract. Section 2 (7) of the Sale of Goods Act defines ‘good’ as ‘every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass….’ This definition of ‘goods’ includes all types of movable properties, whether tangible or intangible.
Labelling computer software as ‘goods’ would make them liable under different tax laws, viz. central excise duty, customs duty on imports, and royalty paid by the assessee for using the trademark of another person. Once the software transactions are labelled as sale of goods or services, other laws related to goods will also be operative, viz., the Consumer Protection Act, 1986, the conditions and warranties, as contained in the Sale of Goods Act (Sections 11-17).
The legality and enforceability of these agreements have not been tested by the Indian courts so far. No software licence has been invalidated so far on the grounds of not being in writing or signed.Where the transaction is in the nature of sale, the parties may determine the terms and conditions of the contract, which will be enforceable, provided it is not against public policy. If the contract is merely for use or a service contract, the Consumer Protection Act will be applicable and the software vendor/developer may be held liable if the product or service is found to be defective/deficient, as the case may be. But it is also notable that click-wrap agreements may involve more than one jurisdiction, which may give rise to conflict of laws issues. Question may also arise regarding the extra-territorial application of the Indian law. Similarly, anti-trust issues may arise, which may be subject to competition law. The legality of shrink- wrap or click-wrap agreements, having restrictions on the development, use, services, may be called in question under the Competition Act, 2002. Whether Internet contracts would be covered by the Information Technology Act, which has very limited application in IP issues, has yet to be seen. So far as the contract law is concerned, the validity of the shrink-wrap/click-wrap agreements cannot be questioned as long as there is a sufficient offer, an acceptance of the offer, as well as a bargained-for exchange or consideration But a licence agreement, in spite of the fact it fulfills all the requirements of a valid contract, may not be enforceable if its stipulations conflict with the law governing it or it is an unconscionable or unreasonable bargain. In computer software, generally it is the tendency of software producers to do away.
Another difference regarding the procedure of challenging award. According to the provisions of Indian arbitration law the right to challenge an award is a statutory right and thus cannot be waived or taken away by an agreement between the parties. So, parties cannot exclude by agreement any right of appeal or other recourse that the law may provide.
For analysing, issues regarding arbitrability of IP disputes in India there were considered several judgments. In Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (“Booz Allen”), the Supreme Court of India determined arbitrability under Indian law. It observed that disputes involving rights in rem (i.e. disputes concerning rights exercisable against the world at large) are not arbitrable, while disputes concerning rights in personam (i.e. rights exercisable against specific persons) are arbitrable. In Eros International Media Limited v. Telemax Links India Pvt. Ltd., the Bombay High Court considered the arbitrability of disputes involving Intellectual Property rights. The decision of Court was as Eros’ action concerned “a specific particularized relief against a particular defined party”, which would not give it any rights against the world at large, the Court found that Eros’ action was not in rem but in personam. On this basis, the Court concluded that the dispute between the Parties was arbitrable.
India only in cases where issues related to IPR is incidental, however, the actual dispute is over the subject which is contractual in nature involving right in personam, may be a subject of arbitration. Notwithstanding, the law of arbitration of India is based UNCITRAL Model Law there were noticed difference in the procedure of challenging arbitration award.
The recognition and enforcement of patent rights in India is principally governed by the Patents Act, 1970 and the rules issued under the Act. The Act has been amended several times and was substantially amended by the Patents (Amendment) Act, 2005 in order to bring the Indian patent regime into line with the Agreement on Trade-Related Aspects of Intellectual Property Rights ,1994 (TRIPs).
Customs enforcement of intellectual property rights (including patents) is governed by the Intellectual Property Rights (Imported Goods) Enforcement Rules,2007. Right holders can notify the customs authorities of the goods allegedly infringing their patent rights. On the basis of such information, customs authorities can detain and seize the goods in accordance with the applicable procedure.
The law made by the Indian Parliament or the state legislatures is considered binding law, and is the primary source in the case of conflict between sources.
INTERNATIONAL TREATIES. Provisions of international treaties or conventions cannot be applied directly by Courts. Domestic legislation giving effect to these conventions must be passed by the Indian Parliament or the state legislatures. However, in certain exceptional circumstances, where there is no statutory guidance, courts lean towards the direct application of international conventions.
Under the Patents Act 1970, the District Court is the court of first instance for patent infringement actions. If the defendant seeks to challenge the validity of the patent during an infringement action, the action must be transferred to the High Court. However, the High Courts of Delhi, Bombay, Calcutta and Madras exercise original jurisdiction for patent infringement actions that are within their pecuniary jurisdiction, as prescribed under the relevant rules. This means that an infringement action can be brought directly before these High Courts provided that the applicable pecuniary thresholds are satisfied.
There are currently no specialised Courts to hear and decide patent infringement actions, although this has been widely debated.
The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 is currently being considered by the Indian Parliament and is expected to be passed in the near future. If this Bill is enacted into a law, a separate division will be established in High Courts to deal with commercial matters (including intellectual property disputes), and special procedures will be followed for these matters.
More generally, patent enforcement actions are subject to the regular rules on litigation before Civil Courts. Civil Courts have exclusive jurisdiction to hear and decide issues concerning patent infringement. However, the Patent Office and the Intellectual Property Appellate Board (a specialised statutory body established to deal with intellectual property issues) have jurisdiction to decide on issues of patent invalidity.
A software patent holder can start civil proceedings when seeking to enforce its rights. An injunction against the continuance of the threats.Damages for losses suffered, if any.
Criminal proceedings for patent infringement cannot be instituted under the Patents Act,1970.
Effective border enforcement mechanisms are available in India. The government issued the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 under the Indian Customs Act,1962 with a view to strengthen the statutory and executive guidelines, thereby assisting patent holders in enforcing their rights at the borders of the Indian territory.
India has a unique system for the enforcement of patent rights at the borders. When the Intellectual Property (Imported Goods) Enforcement Rules,2007 were initially implemented, the customs authorities were quite active in detaining goods on the basis of registered patent rights. However, one of the cases of detention resulted in prolonged litigation in numerous forums where the detention was challenged and, ultimately, the goods were released. Based on this experience, the Delhi High Court, in Ericsson v Union of India (2012(52) PTC494(Del)), directed the customs authorities to exercise caution and restraint while enforcing patent rights at the borders. While customs authorities have the power to detain goods at the border in straightforward or simple patent infringement cases, they have been directed to act merely as “implementation authorities” in complex patent infringement cases (that is, they must only implement orders passed by the Court).
In February, 2011, the Government issued Circular relating to the implementation of the 2007 Rules. Under this Circular, an online, centralised bond management system has been created as part of the existing Automated Recordation and Targeting System. Through this system, a right holder can provide a one-time bond along with security at the time of registration, to which all ports will have access. In the case of interdiction of allegedly infringing goods, if the amount of the centralised bond and the security are not sufficient to cover the value of the goods seized, the right holder will be required to execute a supplementary bond and provide security for the corresponding amount within three days of the interdiction.