Saturday, April 27, 2013

Legal Attorney Advice - Points to Remember



Dealing with lawyers can be quite the headache when you yourself have never done it before. Sometimes, you may not even determine what they’re saying. However, if you use the methods you may discover ways to efficiently keep in touch with your lawyer. 

Research your lawyer completely. Carefully have a look at their training and work experience. Make sure special attention is paid by you to how they manage your practice. If they struggle managing their practice, then that is a sure sign that they’ll probably struggle handling your case.

Locating a good lawyer is a lot of work. Some time should be put by you apart to do some research and give your self a few weeks to compare different choices. Meet different attorneys to have estimates and request advice. You shouldn’t expect you’ll look for a quality lawyer straight away.

You’ve worked with in the past if you need legal help, don’t always use the lawyer. You may need a certain type of attorney, somebody who specializes in the type of case you are associated with. Do not worry, though. A specialist is not fundamentally high priced, so you should really be able to manage what you need.

Remember, a good lawyer works hard on your case. If they’re working with multiple clients, but they should give you regular changes, speak to you often and continue to have your absolute best interests at heart no real matter what.

You do not want an arrogant attorney, you want a confident one. An outcome can be matter how good they are guaranteed by no lawyer, no. Your lawyer is wanted by you to be confident they can build a strong case to represent you, however not so arrogant to believe that they cannot lose.

Those people who are wanting to determine a lawyer to hire would be smart to conduct an interview. It is important that you talk with any possible lawyers so that you can gauge their experience level and what they can do for you. It will also allow you to develop a report with whoever you end up engaging.

Make an effort to fit the company that you choose with the significance of the specific situation that you are in. You will wish to have a big organization by your side, if you are in a significant emergency.

A good idea to remember if you’re going to be dealing with an attorney in a criminal case is to be completely honest. For legal reasons, whatever you say to your attorney must remain secret. Telling the facts will also give your lawyer the most effective shot at winning your case.

Tell your lawyer everything. Lawyers are bound by confidentiality policies, even at initial consultations, therefore don’t hold back. Withholding information will simply make your lawyer’s job tougher and might even damage your case. So that you can do the best job possible, your lawyer needs every one of the information regarding your situation.

Make sure you understand the costs associated with a particular attorney beforehand. You need to consider what you are able to afford, before you even begin the process of seeking someone out. Discuss the payment plan and fees, as you call different attorneys. Do not be surprised later on!

Any initial meeting or conversation with legal counsel should include four important issues that you question them. Could be the lawyer experienced in your particular form of situation? Do they cost flat rates or hourly fees? Simply how much do they estimate the total cost is going to be? Just how long will this take to completely solve?

Ensure before hiring legal counsel that work allows you to review all of the charges and expenses. Make certain you know his hourly fee, in addition to the fee for every single one of his office staff, if you are paying your attorney by the hour.

If you have been faced with a crime, are in an accident or think you need legal help, you need to employ an attorney. The total amount of time that you wait to create this choice could be an important factor. You intend to have someone on your side that knows what the law states as quickly as possible.

Five Things About Intellectual Property That a Startup Should Consider



Intellectual property rights (IPR) system traces its roots back to 3200 BC. Renaissance Northern Italy is thought to be the cradle of IP system. The first copyright was issued to a printing press invented in the 16th century while the first patent was issued in Florence in 15th century to Filippo Brunelleschi for a floating architectural crane. Trademarks are the oldest category of IPR.

Any organization that is planning its entry into the market should definitely keep IPR in mind. Because the benefits will not just make you richer but can far outweigh the other tangible benefits you get from your business.

Here are five points for a startup to keep in mind :

1. Single intellectual property right is enough to launch your venture

A strong single IP right can give an edge to your new venture and also makes your entry into the market comparatively easy. IP can build a fortress around the organization and protect it from competition. To leverage IP correctly, it is important to know the IP focus of an organization. For example, if you are a technology driven startup, then patents will play a major role besides copyright, trademark & industrial design. If the startup is in the business of movies, then copyright is the king. If the startup is related to games or animation then industrial design along with copyright will take prime position.

Google’s first patent, US6285999, filed on Jan 9, 1998 called Page Rank was a link analysis algorithm. The patent was assigned to Stanford University and not Google in the beginning, as this technology was developed by Sergey Brin and Larry Page when they were PhD students at Standford. Google had exclusive license rights on the patent from Stanford University. Later on the founders purchased the rights from the University for 1.8 million shares of Google in exchange of use of patent. Later in 2005 the University altogether sold the shares for $336 million. Both the institute (assignee) and students (inventors) rightfully exploited their IP rights to build today’s tech giant, Google. The Page Rank IP also holds a trademark protection – an example of a single invention being protected by two different types of IP.

2. DEVELOP YOUR IP PORTFOLIO

It would be a good idea for startups or any business, to align core competencies of business with their IP strategy. This helps to build a strong IP portfolio. Almost all patents of Google are in ‘computing, calculating and counting’ domain. Thus Google follows a very focused innovation and IP generation process.

For example: In the computing space, Google has registered a patent to detect events of interest in context of network traffic, registered as US7970934B1. In this case Google has registered the patent which forecasts the traffic that will come to the Google Search page to search information about any event of interest, like an earthquake. This helps them efficiently manage site traffic and improve user experience.

3. BE AWARE OF IPR OF OTHERS

It is advisable for startups to know the IPR of others to avoid infringement. Remember ‘law does not forgive ignorance’, so no point pleading ignorance in case of a lawsuit.
In October 2006 when Google acquired YouTube, organizations like Viacom Mediaset and the English Premier League filed lawsuits against YouTube for violation of copyright. Viacom said that more than 150,000 unauthorized clips of material owned by Viacom were viewed on YouTube. And Google had to payup for this unauthorized use of Viacom’s IP right.

4. OBSERVE YOUR COMPETITION

Besides an internal focus, it is desirable to keep an eye on your competitor’s IP development. Patent analytics and business analytics can help know the technology trend and market scenario of competitors.
Google keeps a close watch on what Yahoo!, Microsoft, eBay, Amazon, Facebook, Hulu and Washington Post among others are what they are doing. Known as competitive intelligence, Google tracks its competitor’s technology development closely to ensure they are not caught unawares. For example, when Google launched Google Docs it was in direct competition to Microsoft Office’s Word. This gave users the advantage to directly work on a word file online without have to download it to make any changes. This move by Google has impacted the need for users to have a licensed copy of MS Word on their devices to work.

5. COMPETE WITH YOURSELF

To grow, compete with yourself and develop new technologies or brands which will satisfy your customer. When Larry & Sergey founded Google in 1998, they started with their core product — search engine. Later they built the revolutionary email platform – Gmail, creating threat for Yahoo! and have now ventured into cloud based applications that threatens Microsoft.
The creations by Google are result of out-of-the-box thinking which resulted in disruptive innovations. This intellectual input by inventors at Google is rightly protected by IP regimes. And Google is able to commercialize these inventions appropriately and at the right time.

Source: Gouri Gargate, Yourstory. in

India Joins the International Trademark System



Minister for Commerce and Industry, Mr. Anand Sharma submitted India's instrument of accession to the Madrid Protocol for the International Registration of Marks at the World Intellectual Property Organization (WIPO). MR. Sharma is attending a High Level Policy Dialogue on "Innovation and Development: The Indian Experience" at the WIPO. The treaty will come into force with respect to India from July 8, 2013.

The main attraction of the Madrid System is that it offers a trademark owner the opportunity of having his trademark protected in all the member countries of the Madrid system through a single application in a single language with a single set of fees. As a result of India joining the Madrid System, trademark owners can get their trademarks protected in the Indian market as well as in the markets of the eighty nine other member countries through a single application. This step therefore, makes it much easier for trademark owners to get protection for their trademarks in India by significantly reducing the paperwork and currency involved. The same benefit is also available for Indian companies who want their trademarks protected in the other 89 member countries of the Madrid  System.

The Madrid System also allows trademark owners the benefit of online tools which can be used to find existing trademarks, estimate the filing costs and to make electronic payments for the same, check registration status etc. This makes the task of subsequent management of the trademark much easier as well as registration can be renewed online and subsequent changes can be recorded etc through a single procedural step.

These benefits have resulted in the Madrid System becoming attractive for large businesses as well as SME's.  While there has generally been a strong growth in demand for IPR's in 2012, there has been a 4.1% increase in the number of trademark applications filed under the Madrid system in particular in 2012 as compared to 2011. In fact there were 44,018 applications filed in 2012 which was the highest number of applications filed under the Madrid system till date.

On the whole, India's membership in the Madrid System appears to be a welcome step for foreign companies who wish to register their trademarks in India as well as for Indian companies who can get registration for their trademarks in any or all of the member countries of the Madrid system, according to their business needs through a cost-effective, time-friendly, comparatively hassle-free step.


ü      The Madrid system (officially the Madrid system for the international registration of marks) is the primary international system for facilitating the registration of trademarks in multiple jurisdictions around the world.

ü      Its legal basis is the multilateral treaty Madrid Agreement Concerning the International Registration of Marks of 1891, as well as the Protocol Relating to the Madrid Agreement (1989).

ü      The Madrid system provides a centrally administered system of obtaining a bundle of trademark registrations in separate jurisdictions.

ü      Registration through the Madrid system does not create an ‘international’ registration, as in the case of the European Community Trade Mark system; rather, it creates a bundle of national rights able to be administered centrally.

ü      Madrid provides a mechanism for obtaining trademark protection in many countries around the world which is more effective than seeking protection separately in each individual country or jurisdiction of interest.

ü      Madrid now permits the filing, registration and maintenance of trade mark rights in more than one jurisdiction, provided that the target jurisdiction is a party to the system.

ü      The Madrid system is administered by the International Bureau of the World Intellectual Property Organization (WIPO) in Geneva, Switzerland.

Sunday, April 7, 2013

FDI boosters on cards



The government is considering a series of measures to liberalize the country’s foreign direct investment (FDI) policy.

As part of this, it is looking at permitting 26 per cent FDI in insurance broking through the automatic route, which would mean a nod from the Foreign Investment Promotion Board (FIPB) would not be necessary.

The Department of Economic Affairs has also suggested that activities covered under the non-banking financial company list be enlarged to include financial services such as insurance agencies and services auxiliary to insurance. It is also seeking to allow up to 100 per cent FDI in commodity broking under the automatic route, subject to certain capitalization norms.

Many of these proposals would be incorporated in the consolidated FDI policy, which is modified every six months. The latest version is expected soon.

In a major boost to FDI in wholesale retailing, the government is set to clarify the definition of a group company. Under the definition, group companies would mean two or more enterprises that directly or indirectly are in a position to exercise 26 per cent or more of the voting rights of another company, or can appoint more than 50 per cent of the members of the board of directors.

Walmart had approached the government for a clarification on the definition of what constituted a group.

The government had earlier scrutinized the relationship between Bharti Walmart - a 50-50 joint venture for cash-and-carry between the Bharti group and Walmart - and Bharti Retail - a wholly owned front-end retail company of the Bharti group.

Branded international retail stores in the fashion and jewellery businesses have been stymied from setting up stores through the single-brand retailing window due to a clause that makes it mandatory for these to sell only those products “which are branded during manufacture”. The government is planning to put a clarificatory guideline exempting such firms from this rider.

The government is also looking at permitting a foreign company that has picked up the entire stake in a pharma company to make additional investment through the automatic route, but with a few riders. It can now infuse fresh capital or convert external commercial borrowing in the Indian company into equity without going to the FIPB every time. But the money invested must not be used for acquisition of a domestic pharma company.

Foreign route
ü      What the government is planning
ü      26% FDI in insurance broking through the automatic route
ü      Up to 100%  FDI in commodity broking under the automatic route
ü      Clarify what is a group company in policy on FDI in wholesale trading
ü      Exempt single-brand retailers in jewellery from selling only products “which are branded during manufacture”
ü      Permit a foreign company that has picked up 100% stake in an existing pharma firm to make additional investment through the automatic route, but with a few riders
ü      Warrants and partly paid shares to be allowed as instruments of FDI

Courtesy: Surajeet Das Gupta

Guidelines before purchasing house from Builder/ Developer



Important points to consider while entering into an agreement with the Developer.

1. ACTUAL PRICE OF THE HOUSE
The agreement you enter into with the builder details the various costs that you will need to bear for buying the house. This would include the cost for utilities like electricity and water, parking space, various taxes and in some cases even the registration charges.
However, the builder may then levy some extra charges for any of these.
Measures to take
  • Check the agreement very carefully for all the charges applicable.
  • If possible, get the agreement checked by a lawyer for any missing or hidden charges and get the anomalies (if any) rectified by the builder.
  • If the extra charges are for alterations made to the original plan, ask the builder for the sanction letter provided by government authorities for such alterations.
2. ACTUAL SIZE OF THE HOUSE
The agreement would clearly mention the size of the house you are purchasing. However, there is a clause which states '. . . the plans, designs, and specifications are tentative and the developer reserves the right to make variations and modifications. . .'
Therefore, you may agree for a certain size, but the builder can give a different size.
Measures to take
  • Before freezing on your choice of a builder, do some research about the builder's past projects.
  • If possible, talk with other buyers who already have got possession about problems faced by them
  • Try and include a clause in the agreement stating the minimum and maximum size beyond which the builder cannot increase or decrease.
3. CARPET AREA
The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area in which literally a 'carpet' can be laid.
When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.
The carpet area can be 15-30 per cent less than the super built-up area. However, you will not come to know the exact size until the flat's construction has been completed.
Measures to take
  • Purchase the property based on the carpet area of the flat.
  • Ensure that this area is mentioned in the agreement.
  • Try to get a clause included which will ensure that the contract can be terminated if the builder provides a house with the carpet area less than what is mentioned in the contract.
4. DATE OF POSSESSION
The agreement normally mentions a tentative date of possession. However, there have been instances where builders have delayed possession by more than a year.
Measure to take
  • Check the progress of the construction personally.
  • If the progress is slow and would not meet the date of possession in a timely manner, build pressure on the builder.
  • Forming a society with other buyers sometimes helps a lot in getting things to speed up at the builders end.
5. COMPLETION CERTIFICATE
On handing over the house to you, the builder needs to also give a Completion certificate. a completion certificate is issued by municipal authorities which establishes that the building complies with the approved plan.
You would need this certificate for registration of your house and other government formalities.
Measures to take
  • If the agreement does not mention the certificate, ensure that the agreement has a clause which states that the builder will provide the certificate while handling over the house to you.
  • If the builder delays a lot, forming a society with other buyers sometimes helps a lot.
Other than these five points there more points such as the quality of the construction, management of the society, etc. 
For this you can try to add clauses to the agreement or form a society to get the builder to meet your demands. Since there is no industry regulator you can turn to for the redressal of issues, it is important that you are aware of what you want and what you are getting.

Formal Contract before starting new business



Starting a new venture is exciting and once an entrepreneur makes some headway, he is so overjoyed at the prospect of doing business for the first time that he often makes one cardinal error - failure to get into a binding contract with his clients. Sure, initial clients usually come from past networking relationships or as referrals. But that's' no reason to skirt formalities.

The absence of a contract can delay payments and lead to even bigger problems, where a bigger client may not pay up at all! There have been instances where small business owners have had to shut shop because they could neither recover payments from clients nor afford an expensive legal battle.

"Failure of clients to pay up on time or not at all is one of the main reasons for the failure of start-ups in India." The threat of legal action often does the trick with errant clients but this needs the backing of a formal contract."

Here are the whys and wherefores of a formal contract.

1. FIRST, DETERMINE THE TERMS

A business contract must clearly spell out details such as the nature of services provided; the benchmark against which work will be evaluated; and, most importantly, the mode, manner and time of payment. There is no place for vague terms such as 'reasonable time frame' or 'subject to satisfaction'. Other critical details are terms of dispute resolution and termination of the contract. Start-ups tend to ignore the latter two terms as they want to turn a blind eye to the possibility of unpleasant developments or are naïve enough to believe that things will not go awry.

2. SEEK LEGAL COUNSEL

While all this sounds simple enough, one needs a thorough grounding in the Indian judicial system to actually draw up a contract. And, no, the Internet is no substitute for hiring legal counsel. Unfortunately, the Indian legal system does not have separate legislation for start-ups and treats all businesses alike. This is why a bigger company with more experience can stamp out a smaller, first-time entrepreneur if there are loopholes in the contract or, worse still, if there is no formal contract at all!

3. SAFEGUARD INTELLECTUAL PROPERTY
An entrepreneur is unlikely to know about the Indian Contract Act, which must be adhered to while drawing up any contract. Laws pertaining to Intellectual Property (IP) must always be kept in mind, especially if your start-up is in the creative field or any other IP-sensitive business.

4. HIRE AFFORDABLE LEGAL COUNSEL
A formal contract is the very basis of a business agreement. "These documents should be considered the core of the relationship between a start-up and its client, an advisor, employee or investor,". Therefore, it is mandatory to seek legal advice, which should be budgeted for at the planning stage.

So, regardless of how small your business is, make sure you enter into a formal contract before you shake on a deal. At the very least, your professional approach from day one will win you brownie points with angel investors and venture capitalists at a later stage!
Source: Gargi Banerjee, Moneycontrol

Friday, April 5, 2013

Understanding concept of "Power of Attorney"



I. What is a Power of Attorney ?

(a) Definition :

(1) According to S. 1A of the Powers of Attorney Act, 1882 (POA Act) a power of attorney includes any instrument empowering a specified person to act for and in the name of the person executing it.

(2) Power of Attorney is also defined under S. 2(21) the Indian Stamp Act, 1899 (Indian Stamp Act) according to which Power of attorney includes any instrument (not chargeable with a fee under the law relating to the Court fees for the time being in force) empowering a specified person to act for and in the name of the person executing it.

(b) Power of Attorney as an Agency :

(1) A power of attorney is a delegation of authority in writing by which one person is empowered to do an act in the name of the other. The person who acts on behalf of another person (the principal) by his authority, express or implied, is called an agent and the relation between him and his principal is called agency.

(2) A power of attorney holder is nothing but an agent as defined in S. 182 of the Indian Contract Act, 1872 (Contract Act). The authority of an agent is his power to affect his principal position by doing acts on his behalf. Actual authority is the legal relationship between the principal and agent created by a consensual agreement to which they alone are parties.

(3) A power of attorney is a document of convenience. Where circumstances require appointing an agent formally to act for the principal in a particular transaction, or a series of transactions, or to manage the affairs of the principal generally, the necessary authority is conferred by a power of attorney.

(4) In typical commercial transactions, a power of attorney may also purport to act as security to enable the security holder to exercise the powers conferred on him, which would be difficult for the donor to perform at a subsequent time. This subsequent nature of a power of attorney is dealt with herein.  

Termination of a Power of Attorney :

(a) Generally speaking, a power of attorney can be terminated or cancelled by the principal by revoking his authority or by the power of attorney holder renouncing his authority.

(b) According to S. 201 of the Contract Act, an agency can be terminated by the principal by revoking his authority or by the agent renouncing his authority, unless such revocation is prohibited under S. 202 of the Contract Act (quoted herein-below). S. 201 of the Contract Act also states that an agency terminates, inter alia, by death of principal or agent.

(c) Now, the questions that arise are whether a power of attorney can be irrevocable in nature, and, whether an irrevocable power of attorney granted would terminate on death of a donor ? In such an event, would the security holder under a power of attorney, cease to hold such security in the event the donor dies ? III. When does a power of attorney become irrevocable ?

(a) Legal provisions :

(1) The POA Act does not state when a power of attorney is irrevocable. However, in various commercial transactions, a donor gives an irrevocable power of attorney, on contractual basis, to secure the interest of the donee of the power.

(2) Under S. 4 of the (English) Powers of Attorney Act, 1971 a power of attorney is irrevocable if it is expressed to be so and is given to secure :

(i) a proprietary interest of the donee of the power; or

(ii) the performance of an obligation owed to the donee. Then, so long as the donee has the interest or the obligation remaining undischarged, the power cannot be revoked by the donor without the consent of the donee, or by death, incapacity, insolvency, winding up or dissolution of the donor.

(3) Illustration :

In a typical Mumbai scenario, where redevelopment of property is common, A, being the owner of a piece of land over which he resides, gives B, a developer, an irrevocable power of attorney to develop such land and ultimately transfer the same in favour of a Society or Condominium or such Association of Persons. Such a power of attorney is given for a valuable consideration. In the event A dies whilst the property is in the process of being redeveloped, such an irrevocable power of attorney granted by A to B cannot be revoked or terminated and B is entitled to complete such redevelopment.

(4) Where a power of attorney is given for a valuable consideration and expressed to be irrevocable, or is given to secure a proprietary interest of the donee of the power, or the performance of an obligation owed to the donee, then, so long as the donee has that interest, or the obligation remains undischarged, the power is irrevocable.

(b) Authority coupled with interest :

(1) S. 202 of the Contract Act lays down the rule that an authority coupled with interest is irrevocable.

(2) S. 202 of the Contract Act states that "where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest."

(3) Illustrations :

(a) A gives authority to B to sell A land, and to pay himself out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.

(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price the amount of his own advances. A cannot revoke this authority, nor can it be terminated by his insanity or death.

(4) In the aforesaid illustrations, authority is given for the purpose of being a security for a debt, therefore it is irrevocable.

(5) Where the authority of an agent is given by deed, or for valuable consideration, for the purpose of effectuating any security, or of protecting or securing any interest of the agent, it is irrevocable during the subsistence of such security or interest.

(6) To make the authority irrevocable, the agent must have an interest in the property which forms the subject matter of the agency. Where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of any express contract, be terminated to the prejudice of such interest.

(7) The mere fact that a power is declared in the instrument granting it to be irrevocable, does not make it irrevocable.

(8) The exceptional case dealt with here is that in which the authority or power is coupled with an interest in the thing on which power is to be exercised.

(9) Instead of the words authority coupled with an interest used in the English and American systems of law, the Section contains the words the agent has himself an interest in the subject mater of the agency. Under the English law, what is meant by an authority coupled with an interest is this that where an agreement is entered into on a sufficient consideration, whereby an authority is given for the purpose of securing some benefit to the donee of the authority, such an authority is irrevocable. [Clerk v. Laurie, 2 H & N 199].

(10) In Prahlad v. T. F. Kumari, AIR 1956 Pat 233 where, under a document drawn in the form of a power of attorney, a lady agreed that the debts raised by X for her should be realised out of the collections of a particular estate and the effect of the document though not described as one of agency was to create an agency in favour of X, it was held that the agency was one coupled with an interest and therefore irrevocable and in substance amounted to an allocation of the funds to be appropriated towards the repayment of the debts.

(11) Similarly, when an agent is employed to enter into any contract, or do any other lawful act involving personal liability, or is expressly or impliedly authorised to discharge such liability on behalf of the principal, the authority becomes irrevocable as soon as the liability is incurred by the agent [Read v. Anderson, (1884) 13 QBD 779], and where an agent is authorised to pay money on behalf of his principal to a third person, the authority becomes irrevocable as soon as the agent enters into a contract, or otherwise becomes bound to pay or hold such money to or to the use of such person [Robertson v. Fauntleroy, (1823) 8 Moore 10].

(12) So, where a principal and agent agree for valuable consideration or under a seal that the agent is to have authority, for example, to collect rents in order to secure a loan [Spooner v. Sandilands, (1848) I Y & C. Ch. 390], or to sell certain land and to discharge a debt owed to him by the principal out of the purchase money [Gaussen v. Morton, (1830) IO B & C 731], the principal thereby confers an interest on the agent, and the agency cannot be revoked unilaterally.

(13) As decided in Pestanji Mancharji Wadia v. Matchett, (1870) 7 BHC AC 10, where an agent is authorised to recover a sum of money due from a third party to the principal, and to pay himself out of the amount so recovered the debts due to him from the principal, the agent has an interest in the subject matter of the agency, and the authority cannot be revoked.

(14) Illustration : A owes B a certain sum of money. A authorises B to recover from C, the rent which C owes A, and to pay himself (B) out of the rent recovered, the debts due to him from A. Such an authority cannot be revoked by A, because such authority confers an interest on B.

(15) So also a vendor promoter of a company, who is to be paid a commission out of the money raised by the issue of shares, has a clear and direct interest in raising the capital. An underwriter who promises to buy a certain number of shares from the promoter and authorises him to make the necessary application, cannot revoke the authority, this being an authority coupled with interest. [Carmichael case (1896) 2 Ch. 643]

(16) "If a borrower, in consideration of a loan, authorises the lender to receive the rents of Blackacres by way of security, the authority remains irrevocable until repayment of the loan in full has been effected. This doctrine applies only where the authority is created in order to protect the interest of the agent; it does not extend to a case where the authority is given for some other reason and the interest of the agent arises later." [Cheshire on the Law of Contracts, 6th Ed.]

(17) Illustration :

A (lender) has given B (borrower) a certain loan. As a security for repayment of the loan, B authorises A to receive all the rent which B is entitled to — arising out of a certain property owned by B — until such loan is repayed by B to A. Such an authority created to protect the interest of A, is irrevocable.

(18) Further, the principle applies only to cases where authority is given for the purpose of being a security or a part of the security, and not to cases where the interest of the donee arises afterwards and incidentally. In such cases there is no authority coupled with an interest; but an independent authority, and an interest subsequently arising [Garapati Venkanna v. Mallupudi Atchuta-ramanna, AIR 1938 Mad. 542].

(19) However, it is pertinent to note that mere right to remuneration or commission does not constitute an agency coupled with interest.

(20) For example, the agents for the sale of cloth who are entitled to keep for themselves any excess over rates that they might secure from purchases have no interest in the property to be sold or in the sale proceeds thereof, so as to attract S. 202 of the Contract Act [Dalchand v. Seth Hazarimal, AIR 1932 Nag. 34].

(21) In another Bombay case, it was held that the mere fact that the salary of an agent collecting rents was to be paid out of the collections, did not create an interest sufficient to make the authority irrevocable [Vishnucharya v. Ramachandra, ILR 3 Bom. 253].

(22) For instance, as held in Lakshmichand Ramchand v. Chotooram Motiram, (1900) 24 Bom. 403, the interest which the agent has in effecting a sale and the prospect of remuneration to arise therefrom, do not constitute such an interest as would prevent the termination of the agency.

(23) If any such interest were to be created for the benefit of the agent, it should be contemporaneously provided for in the instrument of agency itself and should not only be express but also be explicit. It should not give any room for doubt, nor could it be a matter of interpretation. An agency to be irrevocable should therefore create in the agent an interest in the subject matter contemporaneously with the document wherein such agency is created and it cannot be left to chance or guess or inference.

(24) In Corporation Bank v. Lalitha H Holla, AIR 1994 Kant. 133, held : the fact whether the power of attorney is given for securing the interest of the agent, can be ascertained from the facts de hors the express terms of the contract.

(25) In Kondayya Chetti v. Narasimhulu Chetti, (1986) 20 Mad. 97, held : The interest of the agent in the subject matter of the agency may be inferred from the language of the document creating the agency, and from the course of the dealings between the parties, it need not be expressly given. It is the existence of the interest and not the mode in which it is given, that is of importance.

(26) In Mariyakutty v. Chalandian Bank Ltd., AIR 1957 TC 174, the hypothecation deed showed that the shares and the right to the dividends on the same were all charged for the amount borrowed. It was further stipulated that as long as the debt was in existence, the pledgee was authorised to receive directly from the bank any dividend declared and appropriate the same towards interest. It was held that these words clearly created an agency in favour of the pledgee in view of the hypothecation deed which clearly authorised the pledgee to represent the owner of shares with regard to receipt of dividends from the bank, and that the agency created was one contemplated in S. 202, and could not be determined at the instance of the principal alone. IV. Whether an irrevocable power of attorney would terminate on death of donor ?

(a) Indian Law :

(1) The Supreme Court of India, in the case of Seth Loon Karan Sethiya v. Ivan E. John, AIR 1969 SC 73, held : where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. It is settled law that where the agency is created for valuable consideration and authority is given to effectuate a security or to secure interest of the agent, the authority cannot be revoked.

(b) English Law :

(1) According to S. 4(1) of the (English) Powers of Attorney Act, 1971 a power of attorney is irrevocable if it is expressed to be so and is given to secure :

(i) a proprietary interest of the donee of the power; or

(ii) the performance of an obligation owed to the donee. Then, so long as the donee has the interest or the obligation remaining undischarged, the power cannot be revoked by the donor without the consent of the donee, or by death, incapacity, insolvency, winding up or dissolution of the donor.

(2) According to S. 126 of the (English) Law of Property Act, 1925 (15 & 16 Geo. V, c.20) Powers of attorney, which are given for a valuable consideration and which are stated in the instrument creating them to be irrevocable, cannot be revoked at any time either by any thing done by the donor of the power without the concurrence of the donee, or by the death, disability, or bankruptcy of the donor of the power. Any purported revocation will be ineffective both as regards the donee and a purchaser for value.

(3) Adopting the classical statement of the rule given by Wilde, C.J. in Smart v. Sandars, (1848) 5 CB 895, 917, Bowstead on the Law of Agency, 14th Edition, page 423, states as follows : ]

"(i) Where the authority of an agent is given by deed or for valuable consideration, for the purpose of effectuating any security, or of protecting or securing any interest of the agent, it is irrevocable during the subsistence of such security or interest. But it is not irrevocable merely because the agent has an interest in the exercise of it or has a special property in, or lien for advances upon, the subject matter of it, the authority not being given expressly for the purpose of securing such interest or advances :

(ii) Where a power of attorney whenever created is expressed to be irrevocable and is given to secure a proprietary interest of the donee of the power, or the performance of an obligation owed to the donee, then, so long as the donee has that interest, or the obligation remains undischarged, the power is irrevocable;

(iii) Authority expressed by this article to be irrevocable is not determined by the death, insanity or bankruptcy of the principal, nor . . . where the principal is an incorporated company, by its winding or dissolution, and cannot be revoked by the principal without the consent of the agent."

V. Conclusion :

What emerges from the above is that an irrevocable power of attorney creating an agency, wherein the agent (the donee) has an interest in the property and which forms the subject matter of such agency created for valuable consideration, the agency cannot be terminated to the prejudice of such interest, unless there is an express contract to the contrary. It can, therefore, be inferred that an irrevocable power of attorney granted in relation to a subject matter in which the donee has an interest, cannot be revoked by the donor, nor can it be terminated by the death, unsoundness of mind or insolvency of the donor to prejudice such interest created by the donor in favour of the donee.
Source: P.V.Poornima, Lawyers Club

Indian perspective on Geographical Indication Intellectual Property



The Indian law of Geographical Indications is enshrined in the Geographical Indications of Goods (Registration and Protection) Act, 1999. This Act seeks to provide for the registration and protection of Geographical Indications relating to goods in India. The Act is administered by the Controller General of Patents, Designs and Trade Marks, who is the Registrar of Geographical Indications Registry. The rights granted under the Act, are operative in the whole of India.

What is a Geographical Indication?

A Geographical Indication is a sign used on goods that have a specific geographical origin and possess essential qualities that are due to that place of origin. It is an Indication used to identify agricultural, natural or manufactured goods from a definite territory which have a special quality or characteristics or reputation based upon the climatic or production characteristics unique to the location. A geographical indication conveys consumer that a product is produced in a certain place and has certain characteristics that are due to that place of production. For example, no produces of whisky can call it Scotch, unless it has been produced in Scotland.

Examples of geographical indications from India include DARJEELING tea, BASMATI rice, KANCHIPURAM Silk Saree, ALPHONSO Mango and KOHHLAPARI slippers. Other examples of geographical indications include TUSCANY olive oil in Italy, ROQUEFORT cheese in France, and IDAHO potatoes in the United States.

How Geographical Indication differs from Trade Mark ?

A Geographical Indication is different from Trademark. A Geographical Indication is used to identify goods having special characteristics originating from a definite territory whereas trademark identifies the source of the goods or services of one enterprise from those of others. Unlike Trade Marks which is proprietary in nature, with exclusive right on the owner to use the mark, a Geographical Indication is usually collectively owned by a Community, a group of producers or even by a Nation State.

Why does Geographical Indication need protection?

Geographical Indications denotes the origin and the quality of products which have acquired reputation and goodwill over time. False use of geographical indications by dishonest traders, for example "KANCHIPURAM" for sarees, which was not made in the Kanchipuram area of Tamil Nadu in India, is detrimental to purchasers and legitimate producers. Hence geographical indication needs protection.

Classification of Goods

Almost all jurisdictions including India follow International Classification system in which goods have been grouped into classes 1 to 34 for registration.

How rights conferred by registration

The registration of a geographical indication confers on the authorized users the exclusive right to use the geographical indication in relation to the goods in respect of which it is registered. The Registration offers better legal protection for an action for infringement.

Who Can Apply For Geographical Indication

Any association of persons, producers, organization or authority established by or under the law can apply. The applicant must represent the interests of the producers of the concerned goods.

Authorized User in relation to a Geographical Indication ?

A producer of goods can apply for registration as an Authorized User, with respect to a registered Geographical Indication. He should apply in writing in the prescribed form along with prescribed fee.

Procedure for Geographical Indications Applications

An application for registration of geographical indication shall be in prescribed Form (Form GI-1 for the registration of a Geographical Indication in Part A of the Register by an Indian applicant; Form GI-2 for a convention application; an application for goods falling in different classes by an Indian applicant in Form GI-3 and an application for registration of goods falling in different classes from a convention country in Form GI-4).

The application should include the various requirements and criteria for processing a geographical application as follows:

1.                  How the indication serves to designate the goods as a GI?
2.                  The Class of goods;
3.                  The territory;
4.                  The particulars of appearance;
5.                  Particulars of producers;
6.                  An affidavit of how the applicant claim to represent the interest;
7.                  The standard bench mark or other characteristics of the GI;
8.                  The particulars of special characteristics;
9.                  Textual description of the proposed boundary;
10.              The growth attributes in relation to the G.I. pertinent to the application;
11.              Certified copies of the map of the territory
12.              Special human skill involved, if any;
13.              Number of producers; and
14.              Particulars of inspection structures, if any, to regulate the use of GI.

Upon filing of the application accompanied by prescribed fees, a number will be alloted. The application would be examined on turn to check whether it meets the requirements of the GI Act and Rules. After issuance of the Examination Report submission would be considered. If no objections is raised it would be accepted and would be advertised in the Geographical Indications Journal. An opposition can be lodged within a maximum of four month period. If the opposition is dismissed, the application will proceed to registration in Part A of the Register.

After a geographical indication is registered any person claiming to be the producer of the registered geographical indication can file an application for registration as an authorized user in Part B of the Register.

Term of a geographical indications

The term of a geographical indications registration is for a period of ten years. The renewal is possible for further period of 10 years each. If a registered geographical indication is not renewed, it is liable to be removed from the register.

Remedies For Infringement

The Act also provides criminal remedies. First, the intentional falsification of a geographical indications will bear a prison sentence of at least six months. This may be extended to three years and be accompanied by a fine. Second, the police may conduct search and seizure operations without any warrant. In essence, unauthorized parties may not use geographical indications if such use is likely to mislead the public as to the true origin of the product