“The quality of IPR protection and its service delivery is extremely poor in Nepal”
Madhu Soodan Paudyal
Intellectual Property Protection Society
of Nepal (IPPSON)
How do you assess the present situation of IPR in Nepal?
Intellectual Property (IP) is an essential tool for the economic development of any country. Four factors that drive the engine of IP smoothly are creation, promotion, protection and use of IP. In Nepal, there is no dearth of creative activities coming out from academic and research organisations as well as technical professionals who produce literary, artistic, musical and scientific creations. But Nepal’s IP ecosystem is creeping at a snail’s pace due to inadequacy in the remaining three driving factors of IP. After a passive attitude for more than a decade, the Ministry of Industry finally broke the ice last year by introducing the National IP Policy.
In terms of quantity, the annual application and registration of trademarks appears satisfactory. There are some 4,000 trademarks maintained and valid but the annual application rate for patent and design ranges from zero to four which is quite disappointing. For copyright, registration is not mandatory. So, it does not indicate total progress. However, copyright activities in musical and cinematographic works appear satisfactory but the creators of literary and academic works are not aware about copyright although creative activities are taking place. On the other hand, the quality of IPR protection and its service delivery is extremely poor.
In terms of coverage, IPR extends only to patent, design, trademark and copyright in Nepal. But there are many forms of IPR, such as geographical indication, trade secrets, integrated circuit design and new plant varieties which are required to be covered within the World Trade Organisation (WTO) system. Many aspects like traditional knowledge and indigenous technology, cultural expressions, digital data, bio-diversity and genetic resources and utility models too are not covered by our system though they are of our national interest. Unfortunately, Nepal lacks a specialised IP office, IP service institutions and IP training centre which shows where we are compared to our global partners.
What dimensions of intellectual property protection do the international agreements that Nepal has signed cover?
So far, Nepal has signed three international and one multilateral agreement directly related to IPR. In 1994, Nepal acceded to the Stockholm Convention of 1967 for the establishment of World Intellectual Property Organization (WIPO) and became a WIPO member. Nepal now participates in the WIPO general assembly and various meetings, international training and workshops and receives technical support on various IP subjects.
Second, Nepal acceded to the Paris Convention for the Protection of Industrial Property 1883 (plus amendments) in 1997. With the accession, Nepalis are now allowed to register applications for the protection of industrial property such as patents, designs, trademarks (TM) and others in member countries with the facility of priority date, seeking national treatment under reciprocal basis and also adapting some common rules for industrial properties protection. Third, Nepal acceded to the Bern Convention for the Protection of Copyright 1883 (plus amendments) in 2001. It opened the way for Nepalis with reciprocity to seek international protection of copyright of their works in member countries. Fourth, Nepal joined WTO signing the multilateral agreement in 2004. The agreement comprises of mainly three functional areas such as trade in goods, trade in service and compliance with TRIPS (Trade Related Aspect of Intellectual Property). The third component is directly related to enforcement of major forms of IPR namely the owner’s rights on patent, design, trademark, geographical indication, trade secrets, copyright, integrated circuit design and new plant varieties by the member country with compliance to prescribed standards.
The long awaited Intellectual Property Policy was enacted last year. How do you view this development? How have things changed after the policy came to force?
The IP policy is a positive outcome and a remarkable milestone in the development process of intellectual property in Nepal. Though it is not free from some structural, conceptual, linguistic and other substantial mistakes, it has at least taken a direction and fixed a destination. It has covered the major forms of IPs and expresses the government’s willingness to reform the IP system in Nepal so as to meet international standards. Nothing more than that can be expected from the policy, until a new law is legislated, new rules are formulated and a new office is set up.
Nepal has not been able to update or reformulate the existing law in accordance with the various treaties it has signed including the Paris Convention signed in 2001. How has this affected the security of trademarks in the country?
Out of several intellectual properties, only copyright law has been updated and the Copyright Act, 2059 is in force now. It is almost compatible to the TRIPS/Bern Convention. Nonetheless, there are certain lapses and room for improvement. One serious mistake is that there is no provision for civil action. Even the innocent users of copyrighted material are subject to criminal action. But the Patent, Design and Trademark Law, 2022 (BS), which has been amended thrice, is not compatible with the TRIPS/Paris Convention. The quality of trademark security is suboptimal. It is why grey products are rampant in the market. Even well known trademarks are not recognised and not protected. Some of them are rather registered under the name of a local industry. It is a kind of ‘legal infringement’ and has created confusion and deception among consumers.
There are chances that unauthorised individuals and institutions may patent Nepal’s traditional and indigenous knowledge. How can Nepal secure its intellectual properties from such practices?
It is not only a possibility, it is already happening in reality too. Nepal’s diverse topography, climatic variation and richness in biodiversity have attracted foreign individual and institutional bio-pirates and interest groups who are in search of opportunities to manipulate our traditional and indigenous knowledge as well as bio-resource.
In order to secure our IP, we can take three actions. First, we should systematically document our traditional and indigenous knowledge as well as bio-resource under the name of local institutions or community organisations, whatever is appropriate. It will enable us to use information for defensive purpose to revoke any patent applications deposited in any IP office throughout the world. Second, the government should empower and financially support IP related social institutions that hold the capacity to oppose such illegitimate patent application. Third, while formulating a patent law, provisions should be made for the foreign patent applicant to disclose the source of such material on which the patent is based.
How do you see the government’s preparation to amend or reform the existing law according to the treaty?
The amendment or reformation of the existing law should have been completed two decades ago when Nepal had signed the Paris convention. A new IP law was drafted in 2053 BS under the technical support of WIPO. But as the legislative process was about to be completed, the draft suddenly disappeared. In 2059 BS, another version of a new IP law was formulated by a technical team led by Dr Surendra Bhandari under the technical support of WTO Multimodal Project. It didn’t materialise either as it was argued that it should wait for the introduction of an IP policy first.
At present, there are grounds to believe that a new IP law will come out in the near future, within a year or so, as political instability has almost become a past and the National IP Policy was released last year.
We do not have any parameters to identify well-known trade and service marks in Nepal. What are the international practices regarding the protection of globally recognised trademarks?
WIPO has recommended six criteria for deciding well known marks such as (i) the degree of knowledge of the mark in the relevant sector of the public (ii) the duration, extent and geographical area of use of the mark (iii) the duration, extent and geographical area of the different promotional activities in relation to mark applied goods or services (iv) the duration, and geographical area of any registration or application of the mark and its use and recognition (v) the record of successful enforcement of rights in the mark and the extent of recognition among competent authority and, (vi) the value associated with the mark. These criteria are not hard and fast rules and any country is free to choose any, all or none of them as their respective criteria. But most of the countries have honoured this framework while setting their criteria.
Grey products of well recognised foreign brands are also widespread in the Nepali market. How can we stop these products from entering Nepal?
Efficient coordination among the enforcement agencies, namely IP office (presently the DoI), courts, customs office and Nepal Police can prevent such malpractices. The Customs Act incorporates a provision that allows the suspension of counterfeit goods for a maximum of 20 days. By that time, the plaintiff should submit a court order for the continuation of the suspension or seizure and disposal. If the plaintiff cannot do so within the time limit, the customs office can release the goods making the plaintiff pay the importer reasonable compensation. After the IP law is updated, this provision will be even more effective. If both MoF and Custom Department are constructive in stopping grey products and making it mandatory to mention brand name (trademark) and the real price of commodity in the custom clearance bill, foreign grey products can be identified easily.
The government plans to introduce a unified policy for the protection of intellectual property (IP) aiming to provide IP services from a single office. What are your suggestions for the effective implementation of the policy?
I have always advocated support for a unified IP Policy and an integrated IP office. There are several reasons behind this. First, WIPO was established as the 16th specialized office of UN to coordinate IP and related treaties in intergovernmental and international basis. Second, WTO doesn’t make any distinction between copyright versus industrial property rights and treats IP as a complete unit. Third, a unified IP system is far economical and effective than a disintegrated office as it operates under one system of management than multiple. Fourth, about 73 developing and underdeveloped countries have adopted this kind of system. Fifth, coordination among related ministries, departments, private sector and academia and coordination with WIPO, WTO and IP offices of different nations will become easier and more effective. Sixth, IP subjects like patent, design, trademark and copyright are mutually interdependent and multiple IP is embodied in a single product like TV, mobile etc. Last but not the least, IP related service seekers can avail required services under the same roof.
What activities is IPPSON doing in IPR issues?
Since its establishment in 2012, IPPSON has taken the initiative as an independent organisation to work fully in the area of IP protection. Our ultimate goal is to work as a pressure group. We have been working in this regard by continuously discussing with the concerned individuals at the government level and providing policy suggestions.
So far, IPPSON has been able to conduct awareness programmes and provide policy suggestions only. We use our own resources to conduct such activities that we generate from membership fees. We haven’t applied for any financial grant yet. We have been conducting at least 4-5 events annually in the last few years. This year we weren’t able to conduct programmes at the same rate due to our pending AGM and the local, provincial and federal elections in the country. We also make sure that we celebrate the World Intellectual Property Day that falls on April 26 each year by partnering with relevant institutions.
“Besides separate IP office, a tribunal to resolve IPR disputes swiftly is also needed”
Founder, Global Law Associates PLC
What do you think are the reasons behind trademark infringements in Nepal?
Infringements mainly happen to take advantage of the market value of international trademarks. Those who carry out such acts only have to make a little to no effort at all, in terms of accessing the market which has been already established by the reputed trademarks. Meanwhile, financial benefits also play a role in infringements of trademarks. Many people who have registered trademarks of foreign companies bargain for the ownership of the brands in Nepal and demand large amounts of money to return the ownership. Another factor in this regard is the low trademark and brand consciousness among Nepali consumers. This is why items that look identical to established brands are so widespread in the local market.
The case of the Japanese brand Kansai Nerolac Paints clearly highlights the difficulties international trademark owners are facing here. Due to severe lapses in the existing law in terms of protection and enforcement of trademarks, the company was on the verge of shutting its manufacturing activities in Nepal after losing the court case. Later, it decided to stay in the country and changed its company name to KNP. We have recently re-appealed to revise the case and have received a notice from the Supreme Court. Recently, other cases of trademark and design infringements have also been seen. For example, there is an ongoing case against the copying of packaging and product designs and colour combination of the popular Center Fruit Chewing Gum by a local company. The Italian-Dutch company Prefetti Van Melle is the trademark owner of the brand which it registered here some 24 years ago.
Trademark disputes in nicotine products are likely to reach epidemic proportions in the future. The precedence set by the case of Rajnigandha when the first infringement of its trademark happened encouraged multiple infringements to take place. Now, there are around 25 trademarks similar to the Rajnigandha brand in the market while consumers are unaware what they are actually consuming.
How do you view the role of DOI in protecting intellectual property?
DOI basically is an administrative body with semi-judicial authority. It is the ‘first court’ for the cases in patent, design and trademarks. Nonetheless, there are discrepancies in the workings of DOI. The officials at the department do not have any legal know-how in resolving the IP cases. Secondly, the officials are likely to face various influencing factors during the hearing of the cases. There are not many examples of cases being resolved in a judicial manner. Due to this, international references, global standards and practices in other countries aren’t much overlooked in terms of concluding the cases.
Lately, we have been hearing that DoI has been resolving cases promptly and the use of the Industrial Protection Administration System (IPAS) has been of great help to them in recognising well-known marks. But without doubt that there is a need for a separate and an autonomous IP office equipped with adequate expertise and trained human resource with sufficient tenure and other required resources. Such an office can also look into the promotional aspects of IPR to generate revenue for them and the national coffer. Besides the separate IP office, there is also a need to form a tribunal to resolve disputes swiftly. The provision for a tribunal should be accommodated in the upcoming IPR Act.
There is also a requirement for comprehensive and rigorous academic courses on IP. IP is taught as a part of the post-graduate syllabus at Kathmandu University School of Law and in some other law and business schools either as an optional subject or with low credit weight.
The rampant infringements of well-known marks are primarily due to the absence of parameters in IPR protection. What parameters should be incorporated in the new law?
The WIPO has defined six parameters to determine well-known marks. The parameters include determining the first user or adopter of the well-known mark, the duration, extent and geographical area in terms of any use of the mark, registration and recognition along with its promotion and advertising, and brand value, among others. As a member of WIPO, Nepal first needs to adopt the parameters in its IPR law.
It is not that the parameters haven’t been used in Nepal. There was an instance of a trademark dispute where the Patan Appellate Court (now Patan High Court) ruled in favour of the owner of the trademark on the basis of the WIPO parameters. But the plaintiff has challenged the ruling and the case is subjudice at the Supreme Court.
However, it is quite difficult legally to make a list of the well-known marks.
In India, for example, only 79 trademarks have been recognised as well-known marks by the IP Office and the courts. The small number is primarily due to the fact that the courts have recognised their status as well-known marks after rulings and injunctions. This is a global practice to recognise well-known marks and the courts make rulings and injunctions on the basis of WIPO guidelines.
Nepal’s inability to update or reformulate the existing law in accordance with the various global treaties that it has signed has affected the security of IPs in the country. How binding are the treaties legally for Nepal?
Section 9 of the Nepal Treaty Act, 2047 BS, clearly states that global treaties signed by Nepal shall be enforceable as law as any Nepali law. In this respect, the treaties are legally binding for us. The government, after signing the 2001 Paris Convention, published it in the gazette which is taken as law. The Supreme Court in obiter dictum of a verdict of a case has also stated that the implementation of treaties and agreements where Nepal is a signatory is the duty and responsibility of the government.
Grey products of well-established foreign brands are also widely available in the Nepali market. What are the legal provisions to control such practices?
There are no separate legal provisions for foreign and domestic brands or companies. What is lacking is clarity in the criteria or guidelines for the examination of trademarks. The authority examining the case uses its discretionary powers while making a judgment. Due to lack of specific guidelines, two different examiners may view the case differently and both may be right using their own logic.
Low level of brand awareness among general consumers is another attributing factor in this regard. Many people buy fake products that come with internationally established brand names and trademarks. Any legal action in enforcing trademarks is also difficult. Recently, the authorities planned to raid a factory with an alleged connection in activities related to the counterfeiting of foreign trademarks. But the authorities were only able to take action against the low level distribution channel, whereas the high level channel was left untouched due to pressure exerted upon them.
I think there should be a severe criminal penalty in such cases. The current penalty is Rs 100,000 and confiscation of the goods. It is not that infringements are happening only in Nepal but occurring across the world. The only difference is that right holders obtain a legal remedy swiftly in countries that strongly enforce their laws. In Nepal, going for a legal remedy is a lengthy process full of hassles and there is confusion surrounding the jurisdiction over it. If courts were able to issue stay orders as quickly as possible, it would have a demoralising effect on such offenders.
What is the situation like for patents and copyright in Nepal?
Patent rights have a limited life. After a patent validity expires, its right automatically passes into the public domain and anyone can use it without the consent of its creator. While the WIPO convention has set this at 20 years for a patent holder, Nepal’s law grants 21 years. As in trademarks, there are no issues of patent infringement as the patent filing is almost absent in Nepal. Perhaps our research institutions and universities are too weak, or are facing a resource crunch or lack interests in patents. I have heard that the Chinese government provides budge t transfers to its universities and predetermines the number of patent creations for universities in the budget it provides. Another reason behind the lower number of patent registrations in Nepal is documentation and procedural hassles.
The parameters that define patents are novelty and applicability. In addition, unlike trademarks, patents require a number of technical parameters to be met. Expertise in or human resources to examine such parameters and technicalities to identify their authenticity do not exist. Lack of technical manpower and know how may be the reason why DoI seeks patent registration certificate issued by other countries for patent filing coming from foreign applicants.
On the other hand, copyright has a stronger regulatory mechanism and enforcement compared to trademarks and patents. Registration is not compulsory for copyrights. In case of violation of copyright, the right holder is simply required to prove the date of creation of his/her works. For violation of copyright, there is imprisonment and fines which have worked sufficiently to discourage violations. Police officials also speedily enforce the law in case of copyright violations. We have observed it in the case of recent disputes related to various Nepali songs.
There are chances that unauthorised individuals and institutions may patent Nepal’s traditional and indigenous knowledge. How can Nepal secure its intellectual properties from falling prey to such practices?
In the case of traditional knowledge and geographical indications, they should be granted protection for an infinite period. The new law should provide adequate protection for these forms of IP as well.
“Our resources and expertise are limited in managing issues in IPR effectively”
Director General, Department of Industry
How is DoI working to provide protection to trademark owners?
We examine the authenticity of trademark applications. After this, we issue a three month notice for opposition against the application through our IP Bulletin. If anyone registers a complaint within the stipulated period, the department halts the certificate and evaluates the grounds of such complaints. As a semi-judiciary body, DOI holds an independent hearing for such cases and decides accordingly. If someone isn’t satisfied with the decision, they can file a case at the Patan High Court. If no complains are lodged, we issue certificates for trademark and designs to the applicants. In between this process, we also make trademark searches through our Intellectual Property Authentication Software (IPAS).
There are three types of trademark registration related complaints. One is the third-party objection against the trademark application. The Industrial Property Office publishes all trademarks in its IP Bulletin allowing the public, especially business persons to file a notice of opposition within 90 days. The other two types of complaints are for the revocation of trademark issuance decisions and against the misuse of the existing trademark by a third-party.
Basically, we adhere to the provisions mentioned in the Patent, Design and Trademark Act, 2022. The 18(1) clause of the Act has made it clear that DoI, based on necessary examination of a trademark application shall register the trademark in the name of the applicant. It is just a matter of how deeply the issuing body goes into interpreting the provisions of the Act. In case of renowned trademarks and geographical indication, we don’t grant IP rights right away but use our discretionary authority based on sufficient examination of such applications.
Infringement of trademarks of well-known foreign brands in particular has long been a big problem for DoI with a number of cases pending in the department itself. How is DoI resolving this?
Earlier, the IP related cases weren’t addressed timely. After I came to the office, we started prompt action on the cases. Our legal department too coordinated vigorously. Around nine months ago, there were 649 cases pending out of which we resolved 119 cases by the end of FY2073/74. In the current fiscal year, additional 80 cases were registered while we resolved 165 more. Currently, we have 445 pending cases. It’s surprising that there were cases pending for more than six years.
Is it that the complexities in the existing legal framework are hindering the efforts of DoI to effectively resolve such issues?
Obviously, an Act cannot cover the entire area of a very broad matter like intellectual property. Meanwhile, our act is too generalising in nature, with things true in most situations. So there is a tendency to interpret its clauses according to one’s own interests. There are interest groups eying on leveraging benefits from certain trademarks and in the process hampering the original businesses. In some cases of trademark infringement, there have been incidences of power play as well to protect a party’s interests. We have even learnt that there are businesses holding a number of internationally renowned trademarks in their names.
In such a scenario, we have to analyse how far-reaching effects certain actions can have. It is why we have denied applications for trademark registration of brands like Facebook, Visa and Converse in the name of other types of businesses than these globally known trademarks are affiliated with.
Nepal has not been able to update or reformulate the existing law in accordance with the various treaties it has signed including the Paris Convention signed in 2001. How has this affected the security of trademarks in the country?
It has created an ambiguous situation in terms of IP security. Our first priority is to protect industrial properties. In case of international brands that are renowned and have a global presence, we use our discretion and prevent their infringement. It is our responsibility to abide by the international treaties as well. We use our discretionary authority in accordance with both national laws and the spirit of international treaties and conventions.
Out of 74 patents registered in Nepal in the last eight decades, hardly 10-12 are valid. Why do you think Nepal is lagging behind in terms of patent registration?
Unlike trademarks, a patent is a novel creation which is difficult to achieve and is even much more beneficial for the state. Nepal lags behind in terms of invention, creation and discovery because its research and development is too poor. It is why there is not much happening around patent registration. There was one patent registration in the last month.
Another reason behind such dismal performance in this regard could be lack of awareness about the patent itself and its economic benefits. We have been conducting awareness programmes at district levels about patents, the significance and legal aspects. We understand that it isn’t enough if we really want to improve in patent registration. There is also a need for the involvement of the private sector, research organisations, government bodies and academic institutions for not only encouraging new inventions and their patent registration but also protecting our, culture, knowledge, geographical indication, agricultural products, practices, natural resources, wildlife, forest and herbal resources through patent registration where Nepal holds immense scope.
Research and development (R&D) activities are likely to gain momentum as a number of startup companies are developing various types of products and services. Don’t you think it is important for a body like DoI to encourage startups to register their patents?
First of all, the concerned agency must come forward to register their patents whether they are agriculture research institutions or private technology centres. Even the ones working in the field of invention lack awareness about technical and procedural approaches to patent registration. As a matter of fact, we too lack adequate technical expertise to process and evaluate patent applications.
A single mobile phone is equipped with a number of patented technologies. All those patent holders generate royalties through every sale of a single cell phone. Patent is a viable sector for the economy and the major revenue generator under IP. Nepal needs experts who understand patenting and it can be developed through academic institutions by developing a rigorous curriculum. Private sector, research institutions and concerned ministerial departments should also take the initiative in patenting our authentic creations.
Grey products of well known foreign marks are also widespread in Nepal. What is DoI doing to control the inflow of such products?
IP covers a huge area that includes not only trademark, patent, design, copyright and geographical indication but also the concepts of science, technology and innovation. In contrast, we have limited resources to deal with such a broad issue. It is one of the reasons why we are unable to directly monitor such activities like the inflow of grey products. But we make sure to take the necessary action in case of any complaints regarding trademark infringement and transaction of grey products. Department of Commerce and District Administration Office too has jurisdiction on this.
There are plans to introduce a new IP Act. Where has the process reached?
The existing Act has become very old to cover the areas of IP in today’s context. It requires immediate revision and amendment as business dynamics, technical aspects of IP and technology have changed drastically over the last five decades. Trade has evolved too and today covers broad geographical regions and business categories.
The process to introduce a new Intellectual Property Act has already begun. It is in the process of being drafted and is currently being overseen by Nepal Law Commission. DoI is one of the members in the act formulation committee while other various stakeholders are also being consulted. The progress of the formulation of the act must have stalled due to the elections that were held last year. I believe that the new Act must be introduced as soon as possible and must address the international treaties and conventions as well.