Survival Clause And Law of Contracts

This blog is in reference to the lecture by one eminent professor of law at IIT Kharagpur. The lecture primarily focused on the practical aspects of contractual issues in law. The question that struck the most part of the lecture was if the confidentiality clause of contract can be extended beyond the term of contract? What about the legality of such clause? Typically, it is assumed that the term of contract is till the performance of the contract and the contract is drafted in the manner that "the confidentiality of the data will be maintained by the party for during and the five years beyond the term of contract". In other words, the contract terminates with performance of prime promise. The question put by the professor is, does the confidentiality cease with the termination of contract? How to maintain the legality of contract?

The recourse taken by the professor is to the section 1 of the Contract Act. The saving clause of the provision states that the Act wouldn't affect the legality of any custom, unless the custom or other local methods is inconsistent with the Act. Hence the Contract Act is wider than the subject matter and methods of contracting it provides.

The question that is open for discussion is, what is significance of survival clause and how it can be justified in view of Indian Contract Act? Would the performance of such contracts still be pending unless the confidentiality term is expired.

As suggested by the professor, there is no provision in Indian Contract Act about the survival clause or similar clauses and so did he find his recourse in saving clause of section 1 of the Act. In my opinion, there is nothing in contract Act which is against the survival clause of a contract. I would also take recourse to the section 1 of the Act, however, "not inconsistent" part of the same. I don't see anything in Indian Contract Act which put such survival clause into question. I am not sure about the custom of Survival clause itself, however, if it is there since long, it is beyond doubt that the custom part of saving clause also rescue the matter.

Having said all this, I am still curious to know about the significance of Survival Clause and its special stature in contracts. In my opinion, the provisions of indemnity and other provisions related to breach of contracts (S. 73) are sufficient to provide the protection to party. Other provisions of continuing guarantee in the Act also give sufficient protection.

Taking the crux to question: Indian Contract Act says nothing about the survival clause in particular, however, reading definition of Contract together saving clause of Act, it very much ca be evolved. On the second part of the question, even if survival clause is not there in the contract and confidentiality is extended beyond the performance of one of the promises, the contract subsist to the extent of confidentiality protection. In other instance of presence of survival clause, the contract in whole would subsist, not just the "survival clause" despite the performance of chief subject matter of the Contract.

I am open to suggestion on this by readers as I am curious to have explanation of some unanswered questions. To the rest, I agree with Professor.

Oracle v. Google - An interesting case for open source licensing issues

Oracle filed a wilful infringement case against Google for developing android. Oracle claims that following patents had been infringed by Google:
6,125,447 - Protection Domains to Provide Security In A Computer System
6,192,476 - Controlling Access to A Resource
5,966,702 - Method And Apparatus For Pre-processing And Packaging Class Files
7,426,720 - System and Method For Dynamic Preloading Of Classes Through Memory Space Cloning Of A Master Runtime System Process
RE38,104 - Method And Apparatus For Resolving Data References In Generate Code
(A reissued patent; the original number was 5,367,685)
6,910,205 - Interpreting Functions Utilizing a Hybrid Of Virtual And Native Machine Instructions
6,061,520 - Method and System for Performing Static Initialization
All these patents related to Java platform which were previously held by Sun Microsystems were assigned to Oracle after Oracle took over Sun Microsystems in 2010. Oracle America, subsidiary of Oracle previously Sun, owns copyrights in the code, documentation, specifications, libraries, and other materials that comprise the Java platform. Oracle America’s Java-related copyrights are registered with the United States Copyright Office.

Google’s Android competes with Java as an operating system software platform for cellular telephones and other mobile devices. The Android operating system software “stack” consists of Java applications running on a Java-based object-oriented application framework, and core libraries running on a “Dalvik” virtual machine (VM) that features just-in-time (JIT) compilation.

Oracle has taken a plea that Google has actively, and voluntarily distributed Android and related applications, devices, platforms, and services with the expectation that they will be purchased, used, or licensed by consumers in the Northern District of California. Also without consent, authorization, approval, or license, Google knowingly, willingly and unlawfully copied, prepared, published and distributed Oracle America’s copyrighted work,
portions thereof, or derivative works and continues to do so. Google’s Android infringes Oracle America’s copyrights in Java and Google is not licensed to do so.

In this case, Google instead of making derivates of OpenJDK or using OpenJDK, has reimplemented it. So pertinent question here is that if I reimplement patented software which is distributed freely by way of GPL v2, can I bring a suit of patent infringement and copyright protection?

Issues in the case as per my understanding:

1. Can Google be made liable of patent infringement when Google has not copied or even made a derivative of source code of Oracle which is protected under GPL v.2 license?
Problem: Google has reimplemented the source code instead of reusing or making derivative of source code of Oracle. Google has used Apache Harmony source instead of OpenJDK source, which does not have an implied patent license from Oracle. The patent license granted by OpenJDK only covers OpenJDK derivative works, not reimplementations. So pertinent point is can Oracle still claim patent infringement case against Google when GPL v2 states about an implied patent licence? On the first instance Can Oracle enforce his patent rights on source code when it is available under GPL license v.2?

2. Can copyright infringement case be brought against Google?
Problem: As Google has made its Dalvik, virtual machine, licensed under Apache License v2 and not GPL. Therefore it is not bound by GPL. So if Dalvik is derivative of OpenJDK then Google may be even violating GPL. Going into this deeper, a look into definition of derivative work from US copyright act-
“derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a “derivative work”

As per this definition, Google is safe from this perspective as well as Dalvik cannot be termed as derivative of JIT. A reimplemented version of software cannot be termed as derivative. If it’s a derivative work, then of course GPL comes into picture as derivative of OpenJDK should be protected by GPL and not Apache License.

Although the case is still in mediation stage, but I can say that Google is safe from claims of Oracle as far as copyright infringement is concerned but question still remains for patent infringement in this complex situation of patent rights v. Open source licensing(for Oracle).
A much awaited decision to clarify Open source licensing issues.

US Patent System:Shift from "First-to-Invent" Doctrine to "First-to-File" Doctrine.

Finally Patent system of United States of America is going to adopt “First-to-file” doctrine, in the lines of most of the other countries of the world. The United States and the Philippines were the only two countries in the world whose patent systems are based on First-to-Invent regime. Philippines have already adopted “First-to-file” doctrine. United States of America is going to be the last country to adopt “First-to-file” doctrine. In this system, the patent is granted to the inventor, who is the first to file a patent application at USPTO. After being many unsuccessful attempts to change the US patent system from a First-to-Invent to a First-to-File system, in the year 2011, it is going to be successful. Patent reform bill, is approved by the U.S. Senate In the month of September 2011. The only requirement left is the signature of President Barack Obama.

Advantages of First-to-file:

It is an expensive and involved procedure as it involves in determining who conceived of the invention first, is a tough Job. It rewards the first inventor, not the winner of the race to the Patent Office.

By the use of “First-to-file” doctrine, costly and lengthy interference proceeding at USPTO is going to come to an end. And also it’s a matter of rejoice to small inventor, as it was proving to be expensive for fighting patent interference proceedings.

Another advantage of the First-to-File system is that it eliminates so-called "secret prior art," which are inventions for which patent applications have not yet been filed and therefore cannot be found through a prior art search. As most of the parties will be interested in filing their application as soon as they deem fit. As United States is a developed country with a well developed patent system, public at large is going to get benefit from the system.

Disadvantages of First to file:

Universities are the major incubators of research and development. These universities derive significant income from technology transfer and patent licensing. Scientists/academicians are more concerned with presenting their results at conferences and publishing them in peer-reviewed journals, as an elaborate discussion/debate at various levels brings positive impacts to the research, or matters which were not looked at is given a priority in order to achieve a better and a productive result.   A change to the First-to-File regime may have the unintended consequence of a sharp decline in university patents, ultimately resulting in a decline of technology transfer revenues.

Over all, this is going to benefit public at large, but concerns are bounds to happen, as communities like Biotechnology, biomedical, pharmaceutical, agricultural communities will be in the race of filing applications at USPTO, leaving room for mistakes that can cause headaches for all involved. Concerns with these industries are going to grow in a rapid manner. Hoping USPTO to consider concerns of these particular communities on priority.

FTO (Freedom to operate) Search

A FTO (Freedom to operate) search is a search done in order to ensure that the claims of a particular Product/process of a particular company/Individual/organization [Here in refer as Party] is not encroaching upon the claims by the patent of third party. This search enables the Party to analyze if his product/process is infringing on in-force patents/patent applications, belonging to a third party. And secondly, FTO is Jurisdiction or territorial specific. As in If a particular party wants to release a product in India, where in party posses the patent on its product/process, FTO search with the relevant technology/product will give a information about the patent/applications already made in India, for specific matter/technology. A FTO Search is a search among the claims of in-force patents/patent applications for specific elements/steps of a product/process. A comparison is done between elements/steps of a product/process and individual claims of identified in-force patents/patent applications to determine the freedom to operate.  Claims are the most important part of a patent, where the domain/scope of the patent is determined. It is very pertinent that it is not an easy job to determine the scope of a patent. Studying and analysing the scope of a patent requires skills and experience in interpreting the claims. 

Invalidity Search: Way to healthy R&D and genuine competition

Invalidity Search:

A patent invalidity search is a search done to invalidate the claims of the issued patent. Mostly competitors of a particular field perform this search in order to invalidate the patent, which has been granted/issued to its competitor.  The claim  may relate to a product or process or both. As the technology and competitions are advancing, this search is beneficial to the company/organization. It’s simply because of the reason that no company/organization wants its competitor to grow by taking the undue advantage of circumstances. This is done by uncovering appropriate prior art and best mode, which at most of the times are not mentioned by the applicant. On a practical note, our patent office is burdened with a good number of applications for patent, having inadequate resources, limited time and limited number of persons working with the department, this creates a scenario where Patent Office allows the claims due to error by overlooking the best prior art. In such instances, the invalidity search conducted by the parties for the patent in question will uncover better prior art than the prior art of record uncovered earlier by the patent examiner. By help of this invalidity search, the company/organization is benefited as it can stop its competitors to get undue benefit. Also, it paves the way for a system where only genuine Patents are granted, which further gives rise to better R&D as well as healthy and genuine competition. 

Man's camera, Monkey's work-No Copyright

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This is my reply to the blog written by Prashant yesterday whose link is here.http://justlegalip.blogspot.com/2011/09/can-animal-own-copyright.html#links

Prashant has very nicely described the facts. I will argue here that neither the animal nor the photographer possess the copyright in the photographer.

As sec. 2(d)(iv) of the act says that the author will be

(iv) in relation to a photograph, the person taking the photograph;

It is clear that the definition of person was never intended to include animals in its ambit. So the question of monkey having the copyright does not arise. As Prashant has pointed out that monkey clicked the photo at the instance of author(though this cannot be legally tenable according to definition of instance, I will address this issue separately) proviso (b) to sec. 17 would come into play and hence the person will have photograph. But again, in the main part of the section 17. First owner of copyright.-Subject to provisions of this Act, the author of a work shall be the first owner of the copyright therein

So, the word used here is author which we know according to the definition will include only persons and hence sec. 17 will not come into play.

Prashant has interpreted the word at instance as to include an incident which was not in the control of the photographer. If photographer accidentally leaves the camera and a monkey clicks the photos then he has not done so at the instance of the photographer. When we use word instance there is a certain control or a sense of command in it. But what has happened here is just a series of incidents over which the photographer had no control. Meanings of instance can be found here http://www.merriam-webster.com/dictionary/instance. Instance will necessarily involve a certain amount of intention to enter into a relationship, whether legal or otherwise.

It may sound a little strange but in this case, the photograph will go straight in public domain where no single person can claim copyright in the photograph.

Lastly, we should not forget the purpose of copyright law is among other things, to promote the growth of arts in the society. Obviously when the photograph in this case goes in public domain, the interst for larger public clearly out weighs the interest of the photographer who is claiming copyright without exercising any judgment or skill in the work. By doing so, the economic incentive for other photographers to click more photos will not get affected because incidents like are unlikely to happen. We should not forget that IP laws seek to give protection where the creators deserve and IP laws also seek to not to give protection where a person does not deserve protection because there is no originality in the work. That is why we have remedies against infringement.

Can an Animal own a copyright ?

After an overdose of boring 'intellectual posts' I hope this rather humorous copyright controversy would be more enlightening than all others.. Though the parties to the controversy and the applicable copyright laws are not Indian, we may still discuss the Indian Position on this for the 'learning sake'

Facts in short, a famous wild life photographer David Slater during his visit to a national park in Indonesia, left his camera unattended (as claimed in the news report here and a macaque (a type of dexterous monkey) took up the camera and ended up clicking some fantastic photographs that have become a talk of the photography world. A couple of these photographs contain a copyright notice which indicates that the copyright in the photographs clicked by the macaque belongs to 'Caters News Agency'. The website techdirt.com covered this story and questioned the copyright ownership of Caters News Agency in these photographs. In turn, Caters News Agency sent a letter to techdirt requiring them to remove the photographs claiming that techdirt did not hold any copyrights in the photograph. The exchange of letters and notices continues, with techdirt publishing all letters and their replies on their website.

This controversy has brought to light one of the basic inquiries in copyright law i.e. who owns the copyright? Analyzing this with respect to Indian Copyright provisions, the first section that adds to the notoriety of the entire situation is section 2 (d) of the Copyright Act, 1957 which very clearly states that an author in relation to a photograph is the person taking the photograph (probably our legislators never contemplated a monkey clicking a photograph and hence the term 'person' in the definition). Caters News Agency claims to have obtained the copyright from the photographer i.e. David Slater but the pertinent question is- whether David Slater owns a copyright on the photographs in the first place? Techdirt's argument on the other hand is that the copyright in the content is not really owned by anyone and the photographs are in the public domain, open for anyone's use.

My argument on this would be based on the basic premise of copyright law which says that the creator of the copyrightable work is the first owner, in the absence of any agreement to the contrary(see Section 17 of ICA, 1957). So if the student writes an essay in exam, the teacher who asked him to write through a question owns the copyright or if a producer makes a movie, the copyright over everything, from script to music is owned by him (though, we have 'express' agreements stating 'otherwise' in this regard now).

Hence, whether Slater had he intention or not, he left the camera unattended and hence the monkey clicked the pictures, it was done at the instance of him, hence making him the owner of the copyright... (assuming the zoo keepers didnt have any express agreements in this regard, contemplating such situations)

and Probably, this argument would also be applicable to almost all the jurisdictions..

So, with all due respect to the skills of the macaque, but Mr. Slater, you have all the rights according to me..

When can an Arbitration clause in the contract be Invoked

            Nathani Steels Ltd. Vs. Associated Constructions,  1995(Supp) 3 SCC 324


Fact of the Case:

The facts giving rise to this appeal reveal that on 5.9.1989 respondent submitted a tender for the construction of sheds in the appellant’s factory which came to be accepted and a contract came to be executed. Under the terms of the contract executed on 22.9.1989 the work had to be completed by 5.6.1990. The work was not in fact completed on or before the due date. The contract contained the arbitration clause. The dispute which arose on account of the non-completion of the contract was settled by and between the parties and the settlement was reduced to writing as found in the documents submitted as exhibits. By this document the disputes and differences were amicably settled by and between the parties in the presence of the architect on terms and conditions set out in the clauses 1 to 8 thereof. The documents bear the signature between the parties. The respondent, although voluntarily entered into the said settlement, he later realized that there was a calculation mistake in regard to the amount in question on his part and thereupon invoked the arbitration clause. The appellant in High Court however contended that in view of the dispute disputes and differences in connection with the contract having been finally and amicably settled by and between the parties, it was not open to the respondent to unilaterally brush aside the settlement and invoke the arbitration clause as if the dispute survives without having the settlement set aside on the ground of mistake as permissible by law.

Held:

Once the dispute by and between the parties under a contract arising and that is amicably settled by way of a final settlement unless that settlement is set aside in proper proceedings, it cannot lie in the mouth of one of the parties to the settlement to spurn it on the ground that it was a mistake and proceed to invoke the Arbitration

clause. If it is permitted the sanctity of contract the settlement would be wholly lost and one party can take the benefit under the settlement .In the circumstances, since the dispute or difference was finally settled and payments were made as per the settlement it was not open to the respondent to treat the settlement as non est and proceed to invoke the Arbitration clause. So the High Court was wrong in its view therefore the Supreme Court allowed the appeal and set aside the impugned order of the High Court and holds that the respondent cannot invoke the Arbitration clause in relation to the dispute difference settled under the terms of the settlement.

Analysis:

Once the dispute is amicably settled between the parties finally, arbitration clause should be invoked by a party to resolve the same on ground of mistake in the settlement unless the settlement is first set aside in proper proceedings. If the settlement is unilateral and the other party has not given any receipt of settlement, the arbitration clause can be invoked as supreme observed in P.K. Ramaiah and Co v. Chairman & Managing Director, National Thermal Power Corporation.

Karala Muslim Jama- Ath Council vs. The State of Kerala , The Secretary Higher Education and The Directoe of Collegiate Education.

The government of Kerala reserved 10% of total seats in the higher education for the forward class below poverty line. The petitioner filed writ petition against the order contending that the reservation to the forward classes is ultra vires the constitution and that, Article 15(4) contemplates reservation for the socially and educationally backward classes , Scheduled Class and Scheduled Tribes. The reservation of forward class is the encroachment on the privilege provided to these classes under Constitution.

The petitioner also alleged that such step of government is mere appeasement of the forward class who are in majority in the state. It was further argued that such arrangement would keep the unproportionate representation of the socially and educationally backward classes in educational institutes.

Court disagreed with the petitioner. Stating the importance of competition and better education for development, Court suggested that the privilege provided by the Constitution is supposed to be fading everyday as we develop. Court held that the despite being in fortunate classes, “fortunately or unfortunately” they are devoid of admission to good institutes due to reservation and poverty. The grievances of this class were addressed by the Government through the provision of reservation. Further, Court observed that the number of seats remain same for the backward classes as the number of seats in the institutes is increased by the government to match the present number of seats.

The judgment is progressive in nature, however lacks the constitutional discussion that can be expected out of such matter. Court concluded the matter without discussing constitutionality of reservation in this case and without any substantive discussion on Art 15(4).

In KC Vasant and later in Indra Shawaney and Ashok Kumar Thakur cast was put as one of the criteria to regard a community as SEBC, however, the same can’t be the strict rule per se. The class as said in Art 15(4) is independent identity from caste or community. It can be formed with elements of different community who are socially and economically backward.

The question is can economic backwardness be read alone in Article 15(4) for providing reservations. The previous precedence by Supreme Court establishes that the “class” in Article 15(4) of the constitution doesn’t necessarily constitute a caste or set of castes. It may constitute the class when it can be shown that the caste as a whole is socially and educationally backward. The “socially and educationally” backward essentially constitute the destitute, but it has to be shown that the same destitution is so connected that it is to make them socially inferior as well. When a destitute of forward class can be called socially backward is still untold.

Arbitrator must cite the reason of the award while passing Judgment

                              Secretary, Irrigation Department, Government of Orissa & ors Vs.  G. C. Roy, AIR 1992 SC 732

                                                                                                                      

Facts: Appellant and Respondent entered into an agreement for construction works. Clause 23 of the contract states that all questions and disputes (before and after work completion) shall be referred to the sole arbitrator. The work was completed. Respondents claim was not entertained by the Government.  The Arbitrator held that the respondent was entitled to certain amount of money and in addition he was entitled to receive interest. 

Issues: (1) the Award was vitiated as it contained no reasons; and (2) the Arbitrator had no jurisdiction to award pendente lite interest.
 

Reversed Previous Land Mark Judgment:

This judgment by the Honorable Supreme Court has reversed the land mark case on this, where in it was stated that the powers of the Arbitrator to award interest for the period the dispute remained pending before him pendente lite. Since, the Court held that the Arbitrator had no jurisdiction or authority to award interest pendente lite, Bench held that neither the Interest Act 1839 nor the Interest Act 1978 conferred power on the Arbitrator for awarding interest pendente lite. Arbitrator cannot award interest during the pendency of the Suit.

The principle is that a person who has been deprived of the use of money should be compensated in that behalf. In short it is based upon the principle of compensation or restitution, as it may be called (Interest Pendente Lite).

Arguments Advanced: Shri Soli Sorabji submitted that there is no good reason why the arbitrator should be held to have no power to award interest pendente lite. Arbitrator is an alternative forum for resolution of disputes. The idea is to avoid going to Court. If so, the arbitrator must be held to possess all the powers as are necessary to do complete and full justice between the parties. If the arbitrator is held to have no power to award interest pendente lite, the party claiming such interest would still be required to go to the civil Court for such interest even though he may have obtained satisfaction in respect of his other claims from the arbitrator. Such a course is neither consistent with the concept of arbitration nor is conducive to the rule of avoidance of multiplicity of proceedings. After all, interest is nothing but another name for compensation for deprivation. Stated: it must be held that though Section 34, C.P.C. does not apply to arbitrators, its principle does.

According to opposite learned Counsel, a reading of Sections 3, 17 and 41 of the Arbitration Act goes to establish that arbitrator is denied such a power.

In the present case, interest on the amount of the award from the date of the award till the date of the decree granted. The reason is that it is an implied term of the reference that the arbitrator will decide the dispute according to existing law and give such relief with regard to interest as a court could give if it decided the dispute. 

Held: For Issue 1, The Constitution Bench held that an award is not liable to be set aside merely on the ground of absence of reasons. Court held that when agreement provides a clause that arbitrator will give reasons for award then he is bound to give reasons for his decisions. Else not. But as of 2011, this law is not applicable because of the reason that, this is based upon Arbitration Act 1940, while 1996 Act has made it mandatory for arbitrator to cite reasons for the award, unless and until it is agreed by both the parties.

For Issue 2, in the absence of agreement to the contrary, the Arbitrator has jurisdiction to award interest pendente lite. Where agreement between parties does not prohibit grant of interest and where party claims interest along with or without claim for principal amount and that dispute is referred to arbitrator, he shall power to award interest pendnte lite - he has discretion to decide such matter subject to conditions of agreement.

Analysis:

Generally, the question of award of interest by the Arbitrator may arise in respect of three different periods, namely; (i) for the period commencing from the date of dispute till the date the Arbitrator enters upon the reference; (ii) for the period commencing from the date of the Arbitrator's entering upon reference till the date of making the award; and (iii) for the period commencing from the date of making of the award till the date the award is made the rule of the court or till the date of realisation, whichever is earlier.

This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes-or refer the dispute as to interest as such-to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view.

Husband’s telephone can be disconnected if House-wife defaults to pay for her telephone

              Surjit Singh Vs Mahanagar Telephone Nigam Ltd., (AIR 2008 SC 2226) 

FACTS OF THE CASE:

The appellant and his wife are living together at their residence in Rajouri Garden, Delhi. At that residence, there is one telephone line bearing No. 5121187 in the name of appellant Surjit Singh and there is also another telephone line bearing No. 5416493 at the same residence in the name of the appellant’s wife. There is a third telephone line bearing No. 3265301 in the name of the appellant and installed at the business premises of the appellant at # 1195, Chahrahat Building, Jama Masjid, Delhi. It appears that there were arrears of telephone dues in connection with line No. 5416493 which was in the name of the appellant’s wife. For non-payment of the telephone dues in connection with this line, the other two lines in the name of the appellant bearing No. 5121187 at his residential premises and line No. 3265301 at his business premises were disconnected. 

CONTENTION:

Appellant contended that the telephone line in his own name bearing line No. 5121187 at his residence and line No. 3265301 at his business premises should not be disconnected on account of non-payment of dues in connection with the line in the name of his wife bearing No. 5416493. He contended that he and his wife are two separate legal entities and he could not be penalized for the fault of his wife. 

JUDGMENT OF THE COURT:

The Hon’ble Division bench of the Apex Court while pronouncing the judgement observed that such an interpretation would be in the teeth of the language used in Rule 443 read with Rule 2 (pp) of the Telegraph Rules, 1951, which defines “subscriber”. But in such a case the literal interpretation rule has to give way to the purposive construction rule. The intention of Rule 443 obviously was that payment of telephone dues should be made promptly, otherwise the telephone department will suffer. The interpretation which effectuates and furthers the intention of Rule 443, i.e., the telephone bills should be paid in time has therefore to be adopted. The word ‘subscriber’ has therefore to be widely constructed. Hence the telephone line in the name of another person who is economically dependent on the former can be disconnected for non-payment of bills in connection with the telephone line in the name of the latter. Such an interpretation would effectuate the intention of Rule 443. It would make no difference whether the telephone line is at the residence or at the business premises, even of the two are entirely separate. Further the Apex court deeply regretted that these principles have rarely been used in Indian Courts.

    

ANALYSIS:

The decision of the Apex Court intended to interpret the Statute and the word ‘subscriber’ has to be widely constructed. When two relatives are living in the same house a distinction has to be drawn between a telephone line in the name of a person who is economically dependent on another (who may be the husband, father etc.), and the telephone line in the name of a person who has an independent source of income from which he is paying the telephone bills. In the case of the former, i.e., a person who is economically dependent on another who is paying his telephone bills, the telephone line in the name of such other relative on whom the subscriber is dependent can be disconnected for non-payment of the telephone bills of the nominal subscriber.     

The Concept of Fair Rent: IT Perspective

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Fair Rent is the municipal valuation of the accommodation, or rent which a similar accommodation would realize in the same locality, whichever is higher. However, it cannot exceed the standard rent, if any, fixed or determine under a Rent Control Act. If the employer hires the accommodation, Fair Rent Value is the actual rent paid for the accommodation.

It has been observed in Raval & Co. v. K.G. Ramchandran, (MANU/SC/0416/1973) relevant at page 326 para 25 (end) that it was most realistic to peg fair rent to the level of rents prevailing during the previous 12 months.

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From an Income-Tax (“IT”) Perspective

The IT Act, 1961, while levying tax on immovable properties, takes into consideration the fair value of the immovable properties. The IT law insofar as income from house property is concerned revolves round the concept of fair rent. Tax is levied on the basis of the fair rent which is supposed to be the prevailing rent for an identical property in the same locality. However, one has to pay tax on the actual rent if it exceeds the fair rent. The fair rent according to the IT Act is “the sum for which the property might reasonably be expected to be let from year to year.”

The apex court's admonition in a couple of cases that where standard rent has been fixed under the rent control law, the fair rent cannot exceed the standard rent has somewhat checked the vagueness of the explanation mentioned above, but giving rise to further questions as to how is the fair rent determined in a scenario where there is no standard rent? The confusion is not unjustified since not all States have rent-control laws and even where there is one; it does not target all cities and towns in a State. In the absence of a mechanism or an authority to fix the fair rent, an assessee could and often does face considerable harassment.

Innovation and its types...

The term “Innovation” suddenly seems to be in everyone’s vocabulary these days, while some use it as a layman term, the people belonging to science and law fraternity would actually know what it means beyond its simple definition. Innovation happen everywhere, some big some small but can you categorize it? This question lingered in my mind while I was sitting in the IP Management class. The answer to this question is yes and this blog is all about types of innovation with examples.

Now, in terms of IP, innovation can be broadly categorized into 3 parts:

1. Product zone

2. Customer intimacy Zone

3. Operational excellence Zone

Product Zone- innovations of this zone are most talked about and well known and can be further classified into following:

a. Disruptive Innovation- can be broadly termed as breakthrough technology, which revolutionizes that particular field in which the innovation is made. It displaces the existing technology and helps to create new market. For example- Mobile phones and Xerox machines.

This invention helped people to communicate with their loved ones from any part of the world. Gradually the size decreased and now everyone from a businessman to a vegetable vendor owns one.

b. Application innovation- it provides new market for the old products by finding unexploited use of them, for example- use of fault tolerant computers to run an ATM.

c. Platform innovation- these are the ones that leads to the practical application of fundamental innovations. Example- Qualcomm repositioning its CDMA technology from a product differentiating ingredient in its own product to an enabling element for 3G wireless telephony.
 

Customer intimacy Zone

a. Line- extension innovation- it makes structural modification to existing product to create a new sub category with an aim to capture the attention of new customer base, for example- introduction of minivan and SUV in automobile sector.

b. Enhancement innovation- this type of innovation focuses only on one particular property or application of an existing product with an aim to making it finer by each improvement. For example- ice makers in refrigerators.

Operational excellence Zone-

a. Value engineering innovation- such types of innovation focuses on substituting material or a method with a less expensive alternative without compromising on the functionality. For example- TV, PC etc.

b. Integration innovation- this type of innovation seeks to combine the existing innovations into a single centrally managed system. For example- mobiles with camera and FM radio.

for further reading please refer scpd.stanford.edu/dtu/pdf_courses/.../CHAPTER4.pdf

Idea Mobile Communication vs. C.C.E & C. Cochin. (4th August, 2011), SC

The case is extension of the well known case of BSNL v Union of India. The Supreme Court noted following.

1. The SIM Card has no intrinsic value in regard to the Sales tax. The SIM forms a part and parcel of the activation and the charges obtained while providing SIM to customer is an activation charges.

2. No separate Sales Tax can be levied on the SIM as the same is not at all good.

3. The SIM charges should be included in the service tax domain and same can’t be double taxed under Sales Tax as well.

4. The remittance of tax to the parties on the view that it was wrongly paid doesn’t absolve the party to pay it again once it is found that she was taxable on Goods/Service.