HOW TO READ A CONTRACT

-Swapna Sundar, IP Dome

A contract is a legal document. If you have signed it, you will be bound by the terms and conditions spelt out in the document. It is therefore necessary to read carefully and understand the contract fully before you sign it. Ask for and retain a copy of the contract signed by you and the other party to the contract. 

1.    Read the contract first by yourself peacefully, quietly and carefully. Keep marking pencils or highlighters in different colours with you and mark all the words, terms, definitions and clauses that you don’t understand in one colour, keywords in another colour and terms that seem unfair or ambiguous to you in yet another colour. Be prepared to spend several hours doing this the first few times. As you get more proficient, it will get significantly easier. 

2.    Be clear about the parties to the contract. The party who is negotiating with you may not be authorised to sign the contract. Parties may also include successors and assignees. If the parties are designated:“Thiru S., residing at ….CEO of XYZ corporation and PQR consultants pvt. Ltd.”, it would imply that the contract is between Thiru S. and PQRrather than XYZ corporation and PQR. It is better to say “XYZ corporation represented by its CEO, Thiru S.”. Check if you and the person signing for the other side are legally allowed to sign contracts of this nature. 

3.    Identify the meanings of the terms and definitions used in the contract. Some contracts provide a ‘glossary’ or a ‘definitions’ clause; others may not, in which case it may be essential for you to understand the terms using an external reference. You can also suggest inclusion of a definition clause. 

4.    Understand how long the contract will last –the ‘term of the contract’, and in what circumstances it can be extended and for how long. Is it automatically renewed unless the parties decide otherwise?

5.    Also understand fully how the contract can be terminated before the term of the contract should beincluded. Normally a notice period is also specified. The contract should specify what each party should do and not do after the termination of the contract. For instance, where confidential information is involved, employees may be contractually bound not to take up employment in the same industry in the same post for a limited period. 

6.    Understand the list of duties and responsibilities to be fulfilled by each party including the modes of payment and schedules of payment.

7.    Understand what would happen if either party ‘defaults’ or fails  to fulfil their duties either on time, or in the manner in which the performance should have happened. Can the mistakes be cured? If so, how? Understand how to recognise a ‘force majeure’, or a situation beyond the control of either party that makes a service under the contract impossible to perform, such as war between the countries to which the parties belong. 

8.    Ensure that the subject of the contract – a piece of land, or a portion of your business – is clearly identified in the ‘Schedule’ at the end of the contract. Go over the schedule carefully – twice. ‘Lane’ instead of ‘street’ could make a big difference in the enforcement of the contract. 

9.    Identify the issues that could go wrong in the new partnership and check to see if those circumstances are covered. Eg. If the ship carrying fresh food does not reach the port within 3 weeks, what is to be done under the contract. 

10.    Seek an appointment to go over the contract with the other party. Don’t feel hesitant to go over the contract line-by-line with them. Better and longer relationships are founded on good contracts. Ensure that any changes are incorporated in the contract in writing. 

11.    The negotiator may say some clauses are ‘usual’ or ‘normal’ in their contracts and may ask you to move to other clauses. Don’t take his word for it. Go through these ‘Boilerplate clauses’ carefully. Terms that are normally covered in boilerplate clauses are:
a.    Governing law and courts of jurisdiction: if your business partner is American, the contract may say the governing law is of a US State and that the venue of the court is New York. It would bankrupt a small Indian company if they were to fight a case in the US. In such cases, negotiate for shifting the venue to India, or a mutually acceptable venue such as Singapore.
b.    Entire agreement clauses: read to see if your contract encompasses all previous agreements between you and the other party.
c.    Modifications: Ensure that any modification must be carried out by both parties in writing.
d.    Alternate dispute resolution: check whether your contract contains an arbitration or mediation clause and if it does not, then ask for it to be included.
e.    Correspondence and notices: ensure that you read and understand who in the other party must receive notices and communication from you. 

12.    If the contract could make or break your business or endanger your savings, have the contract vetted by and read and explained to you by your lawyer.

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What Apple v. Samsung can teach us about design

-Swapna Sundar, IP Dome

On 9^thJuly 2012, the UK High Court of Justice Chancery Division patents Court decided in favour of Samsung in an action where Samsung sought a declaration that the three of its galaxy tablet computers do not infringe Apple's community design registration for the IPad. His Honour Judge Birss QC decided the case in favour of Samsung.

Community Design practice in Europe has interesting concepts that help to clarify the subject of industrial design for designers in the fledgling Design IP regime of India.

Concept of Informed User:Designs are to be assessed from the perspective of the informed user.  He is a user of the product which the design is intended to be incorporated. He is not the designer, technical expert, Manufacturer or seller. However, unlike the average consumer of the trademark law, he's particularly observant. He (or she) has knowledge of the design corpus and of the design features normally included in the design of existing in the sector concerned. He is also interested in the products concerned and uses a relatively high degree of attention when he chooses them. The informed user also conducts a direct comparison of the design in issue unless there are specific circumstances of the device has the characteristics which make it impossible or impractical or uncommon to do so. The informed user neither

(A) merely perceives the designs as a whole and not analyse the details

(B) observes in detail minimal differences may exist

The informed user in this case will consider the product side by side, whether they are sold to the public shops and websites.

Exclusion of Function: Design registration law in general, excludes from protection features of appearance that are dictated solely by function.The "multiplicity of forms" theory states that, design is not dictated solely by function if it can be shown that the same technical function can be achieved by another design.

Overall Impression that the design produces on the informed user:The test of "different overall impression" is wider than protection against identical or nearly identical products. While Samsung claimed that the overall impression created by the Samsung Galaxy Tablets were on the informed user from those created by Apple iPad understanding the design in its proper context, Apple claimed that the overall impression produced on the informed user by Samsung tablet is not different from the one produced by the register design of Apple. Apple contended that the design must be understood properly bearing in mind the existing design corpus and the degree of freedom of the designer

Existing Design Corpus: Design corpus is determined taking into consideration the nature of the product to which the design is applied, the industrial sector to which it belongs on the degree of freedom of the designer in developing the design. Although in design law, it is necessary for the applicant to indicate the products in which the design is intended to be incorporated, the indication cannot be used to limit the prior art designs that make up the design corpus.

The design, to be registrable should be different from the designs in the existing design corpus. When the design is based on a new technology which brings new design constraints, then the designs (based on old technology) may have little relevance in deciding on novelty or originality of the new design. The Judge in this case felt that consumers of the new technology would be significantly impressed by the new designs that the technology enables.

Degree of Freedom of the Designer:Design freedom may be constrained by (i) the technical function of the product or an element thereof, (ii) the need to incorporate features common to such products and/or (iii) economic considerations (for instance, the need for the item to be inexpensive).

Context of the Design:Apple’s iPads are not concrete examples of the Design that they filed in 2004. Often in manufacturing, fidelity to the filed designs is sacrificed to acquire manufacturability and scalability.

Elements of Apple design: simplicity; unadorned and tile shaped. The large faces are blank with a screen on one side and back completely blank. Corners are rounded; there is a rim around the whole edge. The article is quite thin. The edge forms a right angle to the front face with a curve to the back face. The dotted lines in the Apple design registration do not indicate design element.

Elements of (the three) Samsung galaxy tablet design:very slim tile shaped articles; the front face is quite blank; corners are rounded; a rim around the edge and a border around the screen; the edges of the article are curved so that the bulge outwards. The sides have buttons on the back surfaces of the Samsung tablets differ from each other. Apart from the backs, the key differences between the galaxy tabs are size. The aspect ratios of the tablets are broadly the same and all three are about the same thickness.

Similarities between the designs of Apple and Samsung tablets:

1.       a rectangular, biaxially symmetrical slab of four evenly, slightly rounded corners

2.       a flat transparent surface without any ornamentation covering the entire front face of the device up to the rim

3.       a very thin rim of constant with, surrounding and flush with the front transparent surface

4.       a rectangular display screen surrounded by a plain border of generally constant width centred beneath the transparent surface

5.       a substantially flat rear surface which curves upwards at the site and come to make the front surface of the crisp outer edge

6.       a thin profile, the impression of which is emphasised by item 5 above

7.       overall, design of extreme simplicity without features which specify orientation

In order to make a decision in this case, the Judge decided on the following formula:

(1)          The exercise will start with identifying the informed user and existing design corpus. The overall impression is something produced on informed user.

(2)          The design must be broken down into features. Each feature needs to be considered in order to give it an appropriate significance of weight in three respects – determination by function, difference from the design corpus, and point of view of design freedom.

(3)          The differences from the registered design and the allegedly infringing design need to be addressed and weighted. The waiting exercises concerned with assessing the significance of the similarity to the informed user.

(4)          The court can decide whether the alleged infringement produces a different overall impression on the informed user from the produced by the registered design.

Final take-aways from the judgement:

·         Things which look the same because they do the same thing are not examples of infringement of design right.

·         The goal of design protection is to reward and encourage good product design by protecting the skill, creativity and labour of product designers. Design is concerned with both form and function however, design law is not seeking to reward advances and function. That is the sphere of patents.

·         Function imposes constraints on the design is freedom which do not apply to an artist.

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