Thursday, December 24, 2009

Why is i4i's patent important?

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i4i's patent which Microsoft has been convicted of infringing in Word 2007, is about a generational leap in the capability of computers to process data.
  • HTML as the first generation. If you wanted the author's name to be seen in bold, you used a descriptive tag thus:  bold text
  • SGML was the next generation: it operated with a special complement of descriptive "verbs" or "tags" and software that could process and interpret these efficiently. The advantage of such an approach was that different stylesheets could depict the same text differently. This promoted re-usability of data. Problem lay in the restricted number of tags.
  • XML broke this limitation of SGML; now, one could create one's own tags; browsers could render it so long as it was "well-formed", i.e. close-tags followed open-tags predictably within the document, and there was no open-tag without a corresponding close-tag, or vice versa. Further condensed and sophisticated logic could be imposed on the document structure through the use of rules of logic and structure embedded in Document Type Definitions (DTD) or Schema. This provided another breakthrough in terms of the range of applications -- no longer did one need standard ERP software in order to exchange data; XML coders and decoders did the job, and organisations could merely exchange xml files representing transactional data independent of database software. Thus markup languages made data interchange possible easily and cheaply. Many other applications were developed that made xml a development of nearly revoltionary proportions.  
  • However, with all these developments, tags (which are commands to the computer) were interspersed with the data. This meant that when reading the data stream, the computer had to first apply logic to gather whether each character it read was part of a data stream or a command. This slowed down the ability of the computer to read and process a document or an object, While this may not be apparent on the scale of data that most of us are used to dealing with, where there are mountains of data to process, this is a serious time-and-efficiency robber. 
  • This is where the elegant concept of i4i's patent comes in. If there is a way in which commands are interpreted independent of the content, the computer can read all the content at one go and process the content by implementing the commands in serial order. In other words, if all the commands in a data object ("file") were to be are found in one place and all content in another, the computer no longer needs to evaluate every character to find if it was part of a command or content.  This affords a huge, generational efficiency leap. For the same computing power, a lot more data can be crunched in much less time. In effect, this could make computing power cheaper by raising the efficiency with which computers process information/ data. 
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Patent Infringement Case against Word 2007

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On reading the patent No. 5787449 applied for on 2 June, 1994 and granted to i4i on 28 July, 1998, for a "Method and system for manipulating the architecture and the content of a document separately from each other",  and some MSDN literature relating to the "Custom XML" claimed to be a Microsoft invention, I observed the following.

  • The patent dealt with a method of keeping raw, unstructured data separate from its formatting or presentation-related information. This is different from what is understood as XML because an XML file content is structured, and not in raw form.
  • The patent application clearly differentiates the method from earlier standards including TROFF, RTF and SGML by showing that what they are patenting has no codes embedded in the contet, but instead has a content part, and a metacode map part stored separately. One could have multiple metacode maps acting upon the same content.  The content could therefore be literally anything. Thus, for consistent content that rarely changes, multiple re-use of the content using different metacode maps each serving different purposes, become possible.
  • This is uncomfortably close to what Microsoft calls as "Custom XML" on its MSDN library site. Indeed, way back in 2005, one of Microsoft's lead programmers blogged on an MSDN blog about the new "Custom XML" -- and if you read that, it becomes quite clear even to a relative layman that what Microsoft meant was clearly that it would put an "envelope" around any data (it could be a Word document, a spreadsheet or anything else) that would form part of a composite object, consisting of the envelope and any data (in this case, say, a Word file or Excel Spreadsheet) that is placed in what is called the "XML Data Store". The resultant object, which you and I understand as the MS Office 2007 document format, is called the "Office Open XML package". The advantages of this are expounded in the same blog entry. Brian Jones, the lead programmer, admits (gushes, actually) here (in 2005, remember!)  that for Microsoft, it is a new feature.
  • Both, Microsoft's Custom XML and i4I's patented method are not really about XML. Using this method to store structured, formatted, XML content is a subset of what the system can do. It can store binary (or raw) data equally easily as it can store structured text content.
  • Brian Jones' gushing about a new feature when it has been patented for 7 years is no different from the scathing, withering review of Bill Gates' book, Business @ Speed of Thought -- that Gates predicts the past. Much worse, while Gates only becomes an object of intellectual scorn to the reviewer, what Brian Jones and his ilk have done for Microsoft is to drive Microsoft into a legal patent infringement hole -- costing at least $290 million -- and that won't look pretty from inside Microsoft.
  • Brian Jones or others in Microsoft may have re-invented the wheel, but they cannot claim ignorance of the i4i patent, given that Microsoft has probably among the largest legal departments of any company in the world, and every product must be undergoing IPR infringement vetting before going to the market.
To conclude, I think the decision is fair, the concept was clearly patented, and the i4i patent was clearly infringed, albeit under new names of "XML Data Store" and "Custom XML".
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Thursday, December 3, 2009

The US was also a major IPR pirate not so long ago!

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The US just loves to paint developing countries like China and India in dark colours when it comes to respecting IPR, but here are a couple of articles written during the second half of the 19th century, when England was relatively more prolific in the arts and letters than the United States. It transpires that the United States was not much different from what it alleges that China is today. In other words, the US's own record in this regard has hardly been more impeccable.

In those days, there was no established international copyright code. Therefore, payments of royalties and recognition for foreign authors were not legally enforceable but were based on honesty and "courtesy of the trade".

In 1867, one James Parton wrote, "For forty years or more we have all been buying our books and reviews at thieves' prices... . . Can any one suppose that the proprieters like to see Blackwood and half a dozen other British magazines sold all over the country at a little more than the cost of paper and printing?" He chronicles several instances of authors unable to encash the success of their works, and makes out a cogent case for an International Copyright.

Then, in 1879, Arthur Sedgwick wrote, " ... piracy still flourishes as a profitable branch of trade. ... The attitude of the United States on the subject of copyright is more remarkable than that of any other modern country. ... It has ... studiously fostered international piracy, and refused to foreigners the benefits of its copyright law"

James Fallows, in a more recent article written in Dec 1993, suggests that cheating and cutting corners to get ahead, and then, once strong, advocating set rules of fair play and chiding other powers for failing to abide by them,  was a standard pattern by which developing nations typically bolstered their international economic standing. We can see this pattern very regularly in the big international debates of the day -- be it agricultural subsidies, or climate change initiatives, or IPR.

These writings, both old and relatively recent, represent contemporary and historical evidence that lay bare enough to show that notwithstanding the high moral ground positions adopted by developed nations in multilateral negotiations, were themselves not much different from the targets of their ire only a century-and-a-quarter ago.
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Wednesday, November 25, 2009

Act against ACTA Secrecy

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The governments of the United States, the 27 member countries of the European Commission, Japan, Switzerland, Australia, New Zealand, South Korea, Canada, and Mexico are negotiating a trade agreement named the Anti-Counterfeiting Trade Agreement (ACTA).  Despite the name, the agreement is designed to address not only counterfeiting, but a wide range of intellectual property enforcement issues, including civil and criminal enforcement, IPR in the Digital Environment, etc.. Thus, ACTA seems to be not just a simple trade agreement but something with much wider ramifications.

In most multi-lateral negotiations, generally, sunlight is usually considered the best disinfectant, mainly because secrecy cannot really be maintained over a long period. However, in this case, the specific details of ACTA have largely been kept secret. The United States Trade Representative (USTR) has refused to release even the agenda and lists of particpants for the June 2008 ACTA negotiating sessions. For over two years, the U.S. government has claimed the negotiations can be shielded from disclosure under laws protecting the national security of the United States. Two senators, Senators Bernie Sanders and Sherrod Brown have written to USTR, asking that the ACTA text be made public. Then, in response to sustained pressure for openness, the Obama administration began inviting lobbyists, corporate law firms and big companies to see the "national security" secret documents under non-disclosure agreements that by contract prohibit public criticisim or discussion of the ACTA text. 

I think this makes the secrecy even worse -- the fact that only interested pressure-groups are being allowed to see it and not the general public at large makes it seem that a conspiracy against the interests of the people who are kept in the dark (WIPO, developing countries, NGOs) is being cooked. More specifically, there is no evidence so far that ACTA contains safeguards embodied in Articles 1, 6, 7, 8, 40 and 44.2 of TRIPS, which together protect the public interest.  Further, the very fact that there is a different enforcement mechanism (not really necessary as there is a well-negotiated mechanism in TRIPS Articles 41, 44.1, 45, 46, 47, 50, and 61) gives rise to fears that the new provisions may be more restrictive or undemocratic in their impact.

The Australian Government and the Canadian Government defended the secrecy in an identically worded statement, thus:"A variety of groups have shown their interest in getting more information on the substance of the negotiations and have requested that the draft text be disclosed. However, it is accepted practice during trade negotiations among sovereign states to not share negotiating texts with the public at large, particularly at earlier stages of the negotiation."

I think this secrecy is uncomfortable, and unjustifiable. Until the ACTA, nearly all global negotiations on multilateral intellectual property norms were comparatively much more open and transparent. See these documents 1 2 3 that lay down the extent of transparency in other multi-lateral negotiations.

However, maintaining secrecy is very difficult. There have been leaks of the ACTA text, which seem to suggest that the concerns over the lack of transparency are justified, in that they seem to bend to copyright pressure groups in imposing copyright industry demands on the global Internet, that will impose policing and infringement protection responsibilities on ISPs in the signatory countries. Worse is in store. And these represent only a minuscule portion of the text that has been leaked. What else lurks beneath is a real concern.

Why should India bother about ACTA?
As this commentator puts it, "Because ACTA is intended to create new global international IP enforcement standards, including these provisions will allow US negotiators to achieve what they have not been able to do to date – ensuring that the US's overbroad implementation of the WIPO Internet Treaty TPM obligations becomes the global standard."

India must be bothered about anything that might get pushed down its throat without its consultation or involvement. That's why.
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Tuesday, November 24, 2009

Strong IPR regimes counterproductive for technology transfers

Technology transfers to developing countries for climate control related technologies are not possible due to their weak IPR regimes. This oft-expressed notion has been called into serious question by a 64-page Discussion Paper titled Emerging Asia contribution on issues of technology for Copenhagen jointly authored by representatives of 5 countries' Research Institutes. They evaluated the domestic status and transfer of 3 key mitigation technologies, viz. clean coal, solar power and biofuels, to China, India, Indonesia, Malaysia and Thailand.

They point out that Malaysia and Indonesia have strong IPR regimes, but yet have not benefitted from technology transfers of these clean technologies.

They argue that strong IPR regimes may even hinder developing countries' access to technology. Where patents are honoured, as most patents are held by foreign companies, it stifles local research and prevents adaptation of technology to local needs. 

These are strong arguments indeeed, and their eventual recommendation is even more startling: TRIPS allows individual countries to override patents in a national emergency, so it could be worthwhile to declare climate change a national emergency and climate change mitigation as a public good.

This report should set the cat among the pigeons if any of the developing countries were to follow their recommendation, and their cogent arguments backed by data will surely be the topic of heavy discussion at Copenhagen later this year.
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Monday, November 23, 2009

File Sharing and Copyrights

A new chapter has been written in the File Sharing/ Peer-to-peer networking legality saga.

Pirate Bay, one of the most popular Bit-Torrent trackers, which has been going strong for 5 years, has been forced to close down after a Swedish District Court decision that found them guilty of assisting copyright infringement. Their defences were two-fold: (a) they never really hosted any of the files, but only tracked where they were hosted. (b) Even Google and other search engines provide direct access to illegal .torrent files, so there was nothing specially illegal about what they did -- which is, maintain a sophisticated tracker that leads users to where the .torrent files are hosted.

In the aftermath of the verdict, several private BitTorrent trackers including Nordicbits, Powerbits, Piratebits, MP3nerds and Wolfbits, have closed down in what could be the greatest voluntary tracker collapse ever.

The MPAA had claimed damages of $15 Mn against Pirate Bay but the awarded damages were much lower, though substantial. In a parallel suit, the MPAA has won $110 Mn from TorrentSpy, another .torrent tracker site, in a US federal court.

I am now waiting to see if the MPAA also, having tasted blood, goes behind Google.

Proactively chasing trademark and brand merchandise rights infringers

Private detectives may be used to carry out checks on violation of Intellectual Property Rights (IPRs) on official trademarks and brand merchandise of the Commonwealth Games (CWG) in Delhi next year to avoid monetary loss to the tune of crores of rupees, according to a report in the Business Standard.

This is good news indeed.

Sunday, November 8, 2009

Want to use the Mahatma's pictures? Pay royalty to a German!

 

A canny German named Peter Ruhe has allegedly made a career of collecting Gandhi memorabilia, and has already collected over 12,000 original pictures of the Mahatma and other memorabilia and is intent on auctioning them to the highest bidders. 


Now, he has gone one step further. He is claiming royalty for use of the Mahatma's likeness in Narayan Desai's book, My Life is My Message. He has sold a few items in auction for Rs.8 crores (bought by Vijay Mallya), and also recently offered some photographs to Sabarmati Ashram for Rs.5.5 crores. He claims to be only an agent for the copyright holders in making this royalty claim.

Wonder what the Mahatma would say at international laws which can allow such a situation. 
 

Friday, November 6, 2009

IPR in the IPL: An update


This is an update for the entry dated 30 October, 2009.

After two seasons, the BCCI (which owns the IPL brand) has woken up to yet another revenue stream. During the two seasons, it was noticed that Bollywood refrained from new movie releases. As a result, enterprising cinema operators started selling tickets for IPL on the big screen -- they just relayed the TV feed onto their screens. Particularly during Season 2, this really took off, and several multiplexes raked in the moolah even though there were no film releases.

An auction was announced for cinema screen rights -- with a base bid of US $2Mn. The auction was bagged by Entertainment & Sports Direct (ESD) at Rs.330 crores for 10 years till 2019 for audiences in cinema halls, stadia, water borne vessels, buses, trains, armed service establishments, hospitals, bars, hotels, restaurants, airports, railway stations, shopping malls, offices, construction sites, oil rigs, clubs, auditoriums, spas, salons and other similar public venues.



Wednesday, November 4, 2009

Suit for violating NDA and Misappropriating Trade Secrets

 
In the overcrowded market for e-Book readers, the second-largest book-seller in the world after Amazon, Barnes and Noble, has been sued for violating NDAs and misappropriating trade secrets by Spring Design. Spring Design launched its Alex e-book reader on Oct 18th, and B&N followed suit with its Nook e-book reader, both based on Google's Android OS.

Spring Design filed for patents in 2006, and says that it began talks with B&N in early 2009, and disclosed innovative features of their reader under non-disclosure agreements. Apparently, nothing came of these talks, and B&N introduced the "Nook" less than a month later, with similar dual scree features.

If the allegation is proved, B&N have quite a bit to answer for, and this will draw them into a legal fight when what is important is to concentrate on growing the e-book market.

This case highlights the importance of protecting one's trade secrets and insisting on NDAs -- if Spring Design did not have the signed NDAs, they would not have had the chance of a snowflake in Hell of extracting damages or winning a suit.
 

Friday, October 30, 2009

IPR in the IPL


In the Indian Premier League (IPL), the player gets to choose between two types of contracts. In one, the Board for Control of Cricket in India (BCCI) guarantees a fixed amount to the player; if the auction proceeds are higher, BCCI keeps the excess. In the other, the player keeps the auction price.

In the player auctions, Dhoni and Andrew Symonds ($1.5 Mn and $1.35 Mn respectively) emerged with the highest bids. Shane Warne got a bid of US$450,000 sign-on fee for the first season. It seemed high considering that he was in the evening of his test and ODI career. However, he was not the highest paid, even in his team -- Yusuf Pathan got $475,000. In the event, Warne and Pathan both justified the price paid by the franchisees, with Warne leading his team to a victory in the 1st IPL, with very few other big names.

BCCI is the IPL Franchisor; each team is a franchisee of the BCCI. BCCI licenses the players to play for the franchisees, based on winners at auctions. However, it is acknowledged that the player is himself a brand, and can be used by the BCCI in relation to the IPL matches. As a consequence, the players retain with themselves the right to decide about brand endorsements of their name and image. The players are bound to a team by a  3-year contract, but teams can trade players after 1 year.

BCCI has four IPR-related revenue streams (because it has applied for registering IPL wordmark and the logo as trademarks):
(a)  revenue from sale of franchise rights,
(b) bids from franchisees for ownership of a  team,
(c) title rights and (the most lucrative)
(d) media rights.

Franchisees get 72% of the media rights revenues while 8% goes in form of prize money, and 20% is retained by IPL, in year 1. The franchisees' share declines to 60% over 5 years.
The eight franchisees will receive 80 per cent of the media rights in the first year, 70 per cent in the second, 65 per cent in the third, 60 per cent in the fourth and 50 per cent for the remaining six years.

Total media rights are expected to earn BCCI $1.026Bn or Rs.8,700 crores in 10 years for telecast rights sold to Sony/ World Sports Group consortium. They in turn sold telecast rights on a geographical basis to 7 different networks in year one, which has swollen to 13 different networks by IPL 3, at mostly undisclosed prices.

In the first auction in Jan 2008, the base price for 8 franchises was set at $400 Mn but fetched almost $724 Mn. Teams also pay 10% of the bid amount every year to IPL every year for expenses. Each franchise is, in addition, expected to spend $3-4 Mn on advertising and promotions, and pay for stadium contracts for 7 matches every year at Rs.25 Lakhs per match on an average.

The title sponsorship was bagged by DLF Universal paying Rs.200 crores for 5 years (Rs.40 crores per year) in another open bid process. Pepsi is the tournament's Official Beverage paying, USD12.5 Mn for 5 years (everything official about it, for a change). Kingfisher Airlines got the IPL Umpire Partners with right to advertise on umpires' clothes, and 3rd umpire decision sponsorship for 5 years at Rs.106 crores.

PS: This post has been updated on Nov 6, 2009 and also on 26 March, 2010.

Thursday, October 29, 2009

Social Networks and the "right of publicity"

 

While controversies on the "right to publicity" for celebrities is well-known, the Internet is creating new problems - about the "right to publicity" of non-celebrities.

In February this year, Facebook changed its Terms of Service and claimed ownership of all content on its website - even if the user closed his/her account. They had to contend with a flurry of objections and tens of thousands of people closed their accounts. Within a few days, Facebook was forced to roll back to its old terms of service.

An American couple who posted their Christmas card on a social networking site (community.momlogic.com) found months later that a grocery in Prague had used the photograph on advertisements without seeking their permission! 

In my own case, we got a blown up family colour photograph printed and laminated. As the first lamination was defective, we rejected it,  and got another printout laminated. The store owner put the rejected laminated photograph in his store window - and we came to know of it when several people whom we know asked us whether we were advertising and endorsing the shop! 

In this case, we did not really object.  However, if this had happened in the US, we would have been entitled to sue the shop owner for violation of our "right to publicity", a doctrine well enshrined by a large body of case law involving celebrities as well as non-celebrities. Celebrities who have won right to publicity cases include Woody Allen, Bette Midler and Jacqueline Onassis. In some of these cases, like Onassis' and Midler's cases, the offence was not using their photographs or audio, but using look-alikes and sound-alikes. 
 

Wednesday, October 28, 2009

Value of Intangibles as % of Market Capitalisation Crashes in 2008

An article in Issue 34 of the IAM Magazine carries this sobering observation. 

It traces the growth of this metric from less than 20% in 1972 to hover between 60 and 70% for a decade and a half beginning 1995, to touch a high of 70% by end of 2007, only to see an abrupt about-turn in 2008 to touch 45%.  It also traces the several Accounting and Compliances relating to Intangibles from FAS 141 and 142 in 2001 and SARBOX 302, 404 and 409 in 2002 in the US and IAS 36 and 38 in 2003 and IFRS 3 in 2004 in Europe. These developments coincided with the period when this metric hovered around 70%. All these are projected as attempts to standardize the valuation of this pre-dominant part of the Balance Sheet that few knew much about. However, in hindsight, I cannot help but wonder: Could it be that these accounting standards and compliance developments fuelled boosted valuations and hence income figures?  This is fuelled by another article in the same Issue by Dr. Patrick Sullivan, one of the Gurus of Intellectual Asset Management where he observes: "Valuing IP is complex, with more than 50 different methods currently in use. Given the growing importance of IP to so many organisations, perhaps now is the time to re-think whether global valuation standards make sense".

The article that traces the value of Intangibles as % of M Cap employs a simple-to-understand definition of "reputation" as "the impression formed by stakeholders of how a company manages its intangible assets", and this reputation took a beating in 2008. It observes that financially, the values of most intangible assets are closely linked to one another like the stones in a Roman arch, so that collectively the intangible assets comprise an enterprise’s reputation value – the difference between market capitalisation and book value. The loss of any one key intangible asset, it observes, may destroy a disproportionate amount of reputation value.

Finally, the article ends with two sobering observations: 
  • Reputation restoration, including superior cash management, is the most promising path for creating enterprise value for the near term.
  • For many companies today, surviving the near term is an existential imperative.

Tuesday, October 27, 2009

The Strategic Value of the Traditional Knowledge Digital Library

In view of the sustained attempts by "bio-pirates" seeking to patent formulations of products already in the public domain, being based on traditional knowledge recorded in ancient texts, the exercise of creating and maintaining the TKDL is a salutary exercise in maintaining and making accessible "prior art" written and recorded in texts and languages not universally understood or accessible.  Access to such a database helps patent examiners filter out the meritorious claims from the non-meritorious, on grounds of existence of prior art.

India woke up to the importance of recording such knowledge embedded in ancient texts only when various agencies came together to selflessly fight against the patent granted to "Basmati-like" grains and lines, that would have effectively blocked export of basmati rice to US and other markets as being violative of a patent.

The success in the fights against patents for neem-based fungicides and for treatment of wounds using haldi (turmeric) showed the importance of such a database as a defensive bulwark against bio-piracy.

The benefits of such a database were seen recently when, in a matter of 3 weeks, the attempt by a Spanish company to patent in the EPO a cure for leucoderma based on melon seeds extract was rejected, citing prior art from the TKDL.

Even so, bio-piracy continues unabated. For example, L'Oreal has patented the use of kava, a cash crop grown in island countries like Fiji and Vanuatu and known to the natives for hundreds of years (there are over 100 varieties of kava growing there) for products that stimulate hair growth and reduce hair fall.

A similar concept, that of a "defensive patent entity" has been developed on terms analogous to the TKDL to provide "safe passage" for users of key patents and as a defense against "patent trolls". These entities basically license their patents very cheaply to ensure that benefit of the patents spreads widely. For example, India's CFTRI has patented several taditional snack foods including Traditional Indian Tamarind Toffee, which is most commonly recognised by us as the sweet served on Jet Airways flights.  The idea is to block any attempt at patenting that product, and thereby denying many cottage enterprises the right to make a living, generate employment and profit from selling their wares using traditional knowledge.

Wednesday, October 14, 2009

IPR takes centrestage in WTO dispute on cotton subsidies


The developed world is learning that the legal framework supporting and honouring the western IPR regime in a developing country cannot be taken for granted.
Brazil has been permitted by the WTO to retaliate against the injustice done to their cotton farmers by the generous subsidies doled out by the US to their cotton farmers, making it possible for them to undercut and underprice the cotton. And what form is this retaliation taking? Not new anti-dumping on US imports, or trade embargoes. 
Brazil has been permitted to allow their country's pharmaceutical companies to manufacture medicines in Brazil in deliberate violation of patents held by US companies. This one is a below-the-belt hit for the vibrant US pharma industry. Brazil is a huge market, and very lucrative too. All the lucre will disappear overnight in their Brazilian operations, if this were allowed.
This is very unfair, or very fair, depending on your point of view. 
For US companies, it will seem very unfair, because, for no fault of theirs, they are losing patent protection in a lucrative, large market (there aren't too many of those nowadays!). 
However, Brazil, and most of sub-Saharan Africa, which includes really poor countries like Chad, Mali, Liberia and Burkina Faso, will be cheering. They have cotton they cannot sell thanks to under-priced US cotton flooding international markets; they don't have factories that can add value to the cotton; and they have huge AIDS affected populations. Their cotton farmers and the AIDS patients will like the prospect of better times ahead.
 

Monday, October 12, 2009

Article on Geographical Indications in Business Line

 

Please see article on Geographical Indications authored by the Honorary Webmaster of www.iprformanagers.org, and blogger-in-chief on this blog, Mr. Rajesh Haldipur, in Business Line, a form of Intellectual Property Protection, published in the Opinion Section in the Issue dated 3rd October, 2009.