Laws Relating to Information Technology/Intellectual Property

The digital and creative spheres are governed by laws pertaining to Information technology (IT) and Intellectual property (IP), which guarantee the safety of data, software, and innovations. They create frameworks for data security, electronic transaction management, and the protection of intellectual property rights, including patents, software, and artwork.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

An international agreement known as the Trade-Related Aspects of Intellectual Property Rights (TRIPS) establishes minimal requirements for safeguarding and upholding intellectual property (IP) rights around the world. It was created under the World Trade Organization (WTO) to guarantee that intellectual property laws are uniform, encouraging fair trade and innovation.

Intellectual Property

Intellectual property refers to the creations of the mind in the field of inventions, literary and artistic works, scientific works, symbols, names and image, used in industry, commerce and communication field.

Types of Intellectual Property

Copy Right

Copyright is the legal protection extended to the owners of the rights in an original works which they have created.

Copy rights include: Literary work, Artistic work, Musical work, Dramatic and choreographic Audio Visual/Film and Multimedia, Computer Program

Copy right based Industries: Industrial creation is called copyright based industry, on the basis of nature of the products and devices industrial copy right can be categorized as following

Core industrial based Copy right:
Press and literature /music
Theater production and operas, Motion pictures and video
Radio and Television Program
Photography, Visual and graphic
Software and database
Computers and Equipment
Musical instrument

Partial Copy rights: Coins, Textile, Furniture

Copy Right Act 2002

The copy right Act 2002 provides the following terms of protection to the Author/ creator of the works.

• Economic and moral rights of creator/Author shall be protected through out the life and the next fifty years after his/her death.
• In case of joint creators term calculated from the death of last surviving author.
• The rights shall be protected for 50 years the publish date incase of institutional creations.
• The rights of sound recording shall be protected for 50 years from the publication of such a sound recording.

Types of Infringement of the protected rights.

The activities such as production, reproduction, communication, to make duplicate copy, sell etc. of the copyright material which are done without agreement or authorization of the copy right owner or against to the agreement. The act of change of the language or the structure of any other creations or import of such products to get the economic benefit. The activities that support the unauthorized reproduction of the copy right materials.

Punishment for violation of protected rights

Punishment with a fine of ten thousands to 1 lakhs or 6 month imprisonment or both as per the nature of infringement of protected rights. Punishment will be double in case of repetition of infringement of protected rights. Compensation for the loss caused by infringement. Infringement of copyrights shall be state case and District Court initiates the Jurisdiction.

Patent

A patent is a form of intellectual property that gives its owner the legal right to exclude others from making, using, selling, and importing an invention for a limited period of years. It is a document, issued, upon application, by a government office, which describes an invention and creates a legal situation in which the patented invention can normally be exploited (manufactured, used, sold, imported) with the authorization of the owner of patent.

Because an invention involved great deal of time, money and effort and also included a large element of risk, the exclusive use of the invention must be reserved for a period of time so that it could be exploited and there after used for the general increase of knowledge and wealth.

Trade Marks

A trademark is any sign that individualizes the goods of given enterprise. Ideas and knowledge are an increasingly important for trade, commerce and industry. Most of new production and technology based on invention, innovation research and design. Creators can be given the right to prevent others from using theirs inventions, design or other creations Law ensures right over invention, innovation, research and design as incentive to producer and benefit for whole society. Protection of intellectual property rights encourages to create and invention. WTO is a form for protection of IP and settlement of dispute related with intellectual property rights

Patent, Design and Trade Marks Act, 1965

To manage the legal arrangements in respect to patents, designs and trade-marks for the convenience and economic benefit of the general Public.

“Patent” means any useful invention relating to a new method of process or manufacture, operation or transmission of any material or a combination of materials, or that made on the basis of a new theory or formula.

“Design” means the form or shape of any material manufactured in any manner.

“Trade-mark” means word, symbol, or picture or a combination thereof to be used by any firm, company or individual in its products or services to distinguish them with the product or services of others.

A person desirous of obtaining right over any patent, design and trademarks must be registered by his/her name. The title of patent shall be valid for a period of seven years, the title of the design shall be valid for a period of five years, and the title of the trade marks for a period of seven years from the date of registration. Patent may be renewed not more than Twice for a period of Seven years at a time, a design not more than twice for a period of five years at a time, and a trade-mark for a period of seven years at a time.

The patent, design and trade-mark shall automatically cancelled in case of fails to renew the registration within prescribed time limitation. The patentee shall submit to the National Archive also a copy of the design or model of the article manufactured according to the patent registered under the law. A person, who commits any of restricted acts, shall be fined as per gravity of offense by the order of the Department and the goods or commodities related to the offense shall be confiscated.

In case of violation of provisions relating to design, the Department may be punished with a fine not exceeding Fifty thousand Rupees, and articles and goods connected may be confiscated.
In case of infringement of trademark any one may be punished with a fine not exceeding is One Hundred Thousand Rupees and articles and goods connected with such offense confiscated on the orders of the Department as per the gravity of offense.

Industrial Design

A ‘design’ is aspects of a features applied to an article or product; it is not the article or product itself. The word ‘design’ can be taken to mean a plan or a scheme, which may be written or drawn, showing how something is to be constructed, or how the elements of an item or article are arranged”
Under the TRIPS agreement, Industrial Design must be protected for 10 years. Owners of protected designs must be able to prevent the manufacture, sale or importation of articles bearing or embodying a design which is a copy of protected design.

Others Industrial rights

Geographical Indications: Geographical indications are those indicators which identify a good as originating in the territory where a given quality, reputation of other characteristic of the goods. e.g Scotch, Cheese of Giri.

Integrated Circuits Design: An integrated circuit (IC), sometimes called a chip or Microchip, is a Semiconductor on which thousands or millions of tiny resistors, capacitors, and transistors are fabricated.
In respects of Integrated Circuits design, Which comes under the world intellectual property organization in 1989 but has not yet entered in to force.

Importance of Intellectual property

• IP is even most important asset.
• It has economic impact.
• Enhance the market value and increase productivity.
• Intellectual property drives economic growth and competitiveness.
• IP help to cope global challenges.
• IP right protect the interest of creator and inventor.
• IP right encourages for innovation and reward.

World Trade Organization

WTO is an intergovernmental organization that is concerned with the regulation of International trade between nations. It is officially commenced on 1 January 1995 under the Marrakesh Agreement signed by 123 nations on 15 April 1994 replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The WTO deals with regulation of trade in goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreement and trade related dispute settlement. The Final Act concluding the Uruguay Round and officially establishing the WTO signed by 15 April 1994, during the ministerial meeting at Marrakesh Morocco.

A long list of 60 agreements are fall into six main parts:

• Agreement Establishing the WTO
• Multilateral Agreements on Trade in Goods
• General Agreement on Trade in Services
• Agreement on Trade-related Aspects of Intellectual Property Rights.
• Agreement to dispute settlement
• Agreement relating to reviews of governments’ trade policies

Structure of WTO

It consists following bodies:

• The Ministerial Conference (usually meets every two years)
• General Council:
  Council for Trade in Goods
  Council for Trade-Related Aspects of Intellectual Property Rights
  Council for Trade in Services
• Trade Negotiations Committee
• Office of director-general

Agreement on Trade-Related Aspect of IP Right (TRIPS)

TRIPS is an international Legal agreement between all the member nations of WTO.
It sets down minimum standards for protection and the regulation by national governments of different forms of intellectual property as applied to all WTO member nations. It includes:

• TRIPS ensure the basic principles of IP
• Adequate protection of IP
• Compel to member state for enforce IP rights adequately
• Provide forum for settlement of dispute
• Special transitional arrangement

TRIPS requires member states to provide strong protection for intellectual property rights.
Copyright terms must extend at least 50 years, unless based on life of author.

Copyright must be granted automatically, and not based upon any formality such as registration as specified in the Berne Convention. Computer programs must be regarded as “literary works” under copyright law and receive the same terms of protection. Patents must be granted for “inventions” in all “fields of technology” provided they meet all other patentability requirements and must be enforceable for at least 20 years. No unreasonable prejudice to the legitimate interests of the right holders of computer programs and patents. In each state, intellectual property laws may not offer any benefits to local citizens which are not available to citizens of other TRIPS signatories under the principle of National treatment. TRIPS also has most favored nation clause.

Agreement Relating to Transfer of Technology (supervisory mechanism-licensing and franchising),

Technology Transfer has great impact to develop the economic and commercial sectors. Basically, it is more important to developing country. It provides the more efficiency and productivity. It is more stimulate factors for development. Technology transfer related with intellectual property rights. It is buying and selling as like the goods and services. Transaction of IPs made through purchasing of licensing or franchising. Technology transfer some businesses earned millions amount through the licensing their technology and it is locally applied and expanded Globally.

Supervisory Mechanism for Technology Transfer under TRIPs

Article 66.2 of TRIPS Agreement, developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base.

On the instructions of Ministerial Conference the Council for TRIPs made a decision for effective implementation of Article 66.2 on 14 November 2001:

• Annual reports by developed country Members shall submit at Council With a view to putting in place a mechanism for ensuring the monitoring and full implementation of the obligations according Article 66.2.
• Developed country Members annually reports on actions taken or plan and programs in pursuance of their commitments under Article 66.2.
• Developed country shall provide detailed reports every third year and, in intervening years, provide updates to their most recent reports.

• During the conference member of developing and LDCs countries proposed to establish a ‘working group’ under the umbrella of the WTO.
• Article 66.2 of TRIPS Agreement, developed ‘working group’ for International Transfer of Technology (ITT) to least and developing Country Members.
• In relation to International Transfer of Technology (ITT) , Article 66(2) of TRIPs states that the Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed members country

Agreement relating to transfer of technology
Licensing and Franchising

Licensing is a legal relationship where a party is granted a limited right to use a particular trademark or technology in exchange for royalty or fee. The relationship between licensor and licensee is limited use of licensed trademark or technology. Franchising is more advanced form of licensing and involves more control and interdependence between franchisor and franchisee. Licensing is not an alternative to franchising. Licensing, Franchising, assignment and technology transfer agreements are some of the most common kinds of agreement for commercializing of IPRS. The IP creator typically gets a royalty or license fees for such arrangements. It is critical for an entrepreneur to know the key concepts surrounding licensing and franchising agreements these are often fall under negotiation.

Licensing and Franchising can be used to commercially exploit all kinds of IPs such as Copyrights, Trade Marks, Patents, Proprietary know-how, Trade Secrets and Confidential (Key) Information. Recently, Nortel Networks Corporation, a US based company which was being liquidated, but sold its patent portfolio for about US $ 4.5 billion to multiple technology. Similarly, Sony Ericsson, a mobile company has 30,000 patens related to mobile handset technology

Royalty Payments/ License Fees

Royalties are payments made by one company (the licensee) to another company (the licensor) in exchange for the right to use intellectual property or physical assets owned by the licensor. A royalty is a payment made by one party, the licensee or franchisee, to another that owns a particular asset, the licensor or franchisor for the right to ongoing use of that asset. The agreement must specify the amount of royalty or a license fee that is payable, manner and time of payment.

A variety of payment modes are possible, and parties can use any system that enables them to fully reap commercial benefits from the arrangement. For example, royalty can be paid as a lump sum amount or percentage of revenues of Franchisee or flat fee and percentage of revenues of sale. There could also be a fee structure where the royalty is paid as per a predetermined slab. From the perspective of the licensor this can incentivized the licensee to sell more units. The Licensor/ Franchisor may also want right to conduct (because the royalties are based on transaction) Inventory and accounts as well as periodic audit report submit to franchisee.

Royalty agreements generally are one of two types.

The fixed price-per-unit agreement pays the licensor a set price for every one of its products sold by the licensee. Often, this type of agreement is used when the licensor’s product is one that will be a small part of a larger product produced by the licensee.

The second type of agreement is a royalty that pays a percentage of revenues or operating profit that results from the sale of the licensed product. This is more likely to be used when the item covered by the royalty agreement stands alone or when cost of using the item can be clearly listed.

Cyber Law – Electronic Transactions

Rule and Regulations related with transactions and signatures carried out via electronic means called cyber law. Generally, this law governs and regulates digital signature, Computer crime, intellectual property rights, data protection and privacy along with telecommunication laws. Cyber law deals with legal issues of the internet users and all devices connected over the network, their proper use in order to prevent and control cyber crimes.

Features of Cyber Law

• Access with restricted website.
• Post any offensive material and offensive bite.
• Uploading child pornography and other offensive materials.
• Illegally downloading and distributing protected items.
• Duplication of content or software from CDS/DVDS. For business purpose.
• Misusing the user’s information.
• Sending malicious codes or viruses through website and emails.
• The copyright law of computer software, software source code, trademark law of the domain names, Semiconductor, law of protection of electronic circuit design and layouts and the patent, law of the computer hardware/ software are the key issues that are currently dealt by the cyber law in Nepal.
• Basically, cyber law deals with child pornography, cyber-scans, online fraud, software privacy and much more.
• Cyber law contains a strong provision of punishment against cyber crimes according to the nature of the crime.
• As per the provisions of law, the government is fully authorized to punish cyber criminals-both on individual and institutions.

Main Objectives of ETDS Act, 2063

• Generally, cyber law deals about digital Signature, computer crime, intellectual property data protection and privacy and telecommunication laws.
• To make legal previsions for authentication and regulation of all electronic transaction via electronic media.
• To provide reorganization, validity, integrity and reliability of production, processing, storage communication and transmission system.
• To control the unauthorized use of electronic records.
• Provisions relating to authentication and legal recognition of electronic record, safe keeping of records and digital signature.
• Provisions relating to acknowledge of electronic record, time and place dispatch and receipt of electronic record.
• Provisions relating to the liability of the Network service providers.
• Punishable Action
  • Commission piracy,
  • Destruction of subject matter,
  • Alternation of computer source code,
  • Unauthorized access to computer materials,
  • Damage of information system,
  • Misuse of confidential material of computers,
  • Prison and monitory punishment for wrongdoers.

Telecommunication Act, 2045

• “Tele Communications Service” means a service relating to the acts of the convenience or reception of any sounds, signs, signals, writing or images by the wire, radio, optional or other electro magnetic system whether or not such matters have been subjected to rearrangement, computation or other change in any manner for their emission, transmission or reception.
• Nepal Telecommunication Act is enacted with view to managing and regulating telecommunication services and makes it reliable, easy available to public.
• Communication Act that govern guide and control Tele communication activities in Nepal.
• Nepal Tele Communication Authority is established with objective to manage and regulate the services and making it reliable and easily available to the public.
• Function and Duties of Authority:
  • To provide the suggestions and opinion for government on policy, plan and programs
  • To make reliable and easy services to the public,
  • To make necessary arrangement for basic telecommunication services
  • To prescribe the standards of quality services
  • To regulate and manage the telecommunication services
  • To issues the license to operate telecommunication services
  • To carry out necessary and appropriate functions for development and promotion of telecommunication services
• After the commencement of Act, no one cannot operate the Tele communication services without obtaining license.
• Process of receive of License of Telecommunication services:
  • Provisions relating to notice for submit application for License
  • Provisions relating to application to submit for License
  • Provisions relating to inquiry and formulize the process of License
  • Provisions relating to cancellation of License

Foreign Investment and Technology Transfer Act, 2049

The Foreign Investment and Technology transfer Act, 1992 (FITTA) was enacted with view to attract foreign investor in Industrial sector in Nepal. The main objective of this Act is to bring new technology and huge investments from foreign country as well as ensure foreign investor their investment is secured and attractive. To stand as the international competition, it is essential to promote and develop modern large-scale industries by investing more capital as well as latest technology. We can not afford to invest adequately as well as bring new technology needed to industrialization. In such situation, the best alternative may be attraction to foreign investment and new technology by welcoming foreign investors in Nepal.

Basic Features

• Permission is compulsory to foreign investment and technology transfer.
• Application must be made with fixed assets up to five hundreds million rupees along with other necessary requirement.
• Permission not be granted for cottage and small industry.
• Facilities and concessions for foreign investment.
• Foreign investors can repatriate the amount in foreign currency.
• Foreigner who, visits Nepal to undertake study for investment, shall be provided a non- tourist Visa for up to six month.
• Foreign investor’s family member granted business visa until the foreign investment is retained.
• Investor who makes investment worth of 10 millions shall be granted a residential visa until/ such investment is retained.

Dispute Settlement Process

Mutual consultation in presence of the department. In case of fails to settle the dispute through consultation, party may apply the arbitration process in accordance with arbitration rules of the united Nations commission on International Trade law (UNCITRAL). The Arbitration process shall be held in Kathmandu. The law of the Nepal shall be applicable.

Frequently Asked Questions (FAQ)

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