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Abuse And Misuse Of Patent Rights

On the debate of abuse of patents it can be said that assignment of patents/IPRs in itself is not the problem, the problem arises due to non-enforcement of patent rights and lack of sufficient knowledge regarding patents. There are many myths surrounding patents in India which when discussed highlighted that patent abuse in India is largely due to the myths surrounding it.

The conclusion on the choice whether patents should be made competitive or should they continue to be an exception to the Competition Act, 2002 is that the patents should continue to be as an exception to the Act because the benefits from assigning patents and giving monopoly rights to the patentee exceeds the benefits of charging a market price to the consumers by making patents competitive.

Therefore for the overall welfare to increase it is essential that the patents regime in India is modified regularly and general awareness regarding patents and their proper use is increased by launching awareness oriented programmes, in addition to this proper management of patent right application should be ensured to avoid patent abuse.

Compulsory License (S.84)

The provisions of compulsory license are made to prevent the abuse of patents as a monopoly and to make way for commercial exploitation of the invention by the interested person. Any interested person can make an application for the grand of compulsory license for the grand of patent after three years from the date of grand of that patent on any of the following grounds;
  1. the reasonable requirements of the public with respect to the patented intention have not been satisfied.
  2. the patented invention is not available to the public domain at a reasonably affordable price
  3. the patented invention is not worked within the territory of India. The request for the grant of compulsory license can be made by the licensee of the patent.

Abuse Of Rights

Generally speaking, abuse of the rights as a legal concept is well-known. It means that although as per the theory, someone might be acting within the scope of what is legally permitted (as a ‘right’), as the law is infringed nonetheless because a specific situation turns out to render the chosen action to be legally unacceptable. A right is used, but in an illegitimate (‘abusive’) way. Without the application of the abuse of rights theory, said behaviour could not or only with great difficulty be challenged. Abuse of rights thus frames the general ‘substance over form’ debate. It can be considered a counterweight of flexibility to/in positivistic legal systems.

Domestic approaches
In most legal systems, the notion roots in the more general notion of ‘good faith’. In common law systems, it has been linked to ‘equity14’. We concentrate on the classical and narrow ‘abuse of rights’ doctrine. To this purpose, how the abuse of rights is being applied in the civil law of a number of countries is highlighted here. Countries are addressed as such;
  • The Belgian legal system – the authors’ native country
  • The French - where the notion of ‘l’abus social’ appears particularly interesting in light of instances going against a given rights’ rationale
  • The German - a country with a strong positivistic legal system
  • The Swiss - a country with a clear as well as specific provisions on the specific matter.
In Belgium, the notion (‘Rechtsmisbruik’) in civil law roots in the general obligation to good faith: “Alle overeenkomsten, …, moeten te goeder trouw worden ten uitvoer gebracht”.
As we will see below, this is the case in most jurisdictions. The narrower notion of abuse of rights does not however have a particularly long history in Belgium. Although it first appeared in the early 20th century, ‘modern’ abuse of rights was only established in the 1980s. It is nonetheless considered to be a general principle of law today.

Abuse of rights has been interpreted by Belgium’s highest court in several cases. It has most recently been defined as the exercise of one’s right(s) obviously/evidently going beyond the normal exercise of that right by a careful and concerned person. On this basis, numerous applications of it can be described.

In international law
In the public actors’ relationship, abuse of rights is exclusively based upon the principle of good faith. Good faith is one of the most important principles of the International law. Treaties must be executed and interpreted as well with pacta sunt servanda - in good faith - bona fides. We read it in of the Vienna Convention on the Law of Treaties:

Every treaty in force is binding upon the parties to it and must be performed by them in good faith".

“A treaty shall be interpreted in good faith".

The TRIPs Agreement mentions ‘abuse’ at several occasions.

First, "it says that its member states may take ‘appropriate measures’ (cryptically however: ‘consistent with the Agreement’) to prevent the abuse of intellectual property rights by right holders. This could be interpreted as allowing countries to work with the notion of abuse of rights, but may then also be interpreted as establishing a limitation thereto: ‘consistency with the Agreement’".

Second, members may specify licensing practices or conditions that may constitute an abuse of intellectual property rights. The abuse here is limited to the constellation of licensing practices having an adverse impact on competition. It is thus similar to the US Patent Misuse notion. The provision however does not exclude a broader use. It only - explicitly but exemplary - mentions exclusive grant-back conditions, conditions preventing challenges to validity and coercive package licensing in this context. Further, in Article 41 TRIPs we read as mentioned above that enforcement procedures must be applied in such a manner as to provide for safeguard against their abuse and that adequate compensations for defendants who were victim of abused enforcement procedures are allowed (yet not imposed).

Abuse Of Rights In Patent Law

A classical subject of abuse of rights cases are ownership rights. The notion is classically applied to limit the way one can use one’s garden in relation to the neighbours. Much case law on the matter in fact developed from such cases. Patent rights being (intangible) ownership rights, the application of the notion in patent law should occur predictably smooth. In Germany for instance, patent rights are considered to be a form of personal property as guaranteed under Article 14 of the constitution.

Surprisingly, however, cases in patent law involving abuse of rights arguments are not known of so far. Only concepts similar to those being used in the US patent system can be found: patent misuse and inequitable conduct. The investigation on how abuse of rights would function in patent law therefore has to start from scratch, yet may rely on a strong potential for analogical applications from US doctrines. We therefore start off with these.

Patent misuse
Patent misuse in the United States cannot be used to start a case. It is merely an affirmative defence and unlike abuse of rights, it is linked to competition effects of patents. It is a type of tool internal to patent law to tackle anticompetitive behaviour. Although a breach of competition law is not enough to invoke patent misuse, neither is it a requirement.
Patent misuse can be used to “show that the patentee has impermissibly broadened the ‘physical or temporal scope’ of the patent grant with anticompetitive effect”.
Patent misuse is there to ; “prevent a patentee from using the patent to obtain market benefit beyond that which inheres in the statutory patent right”.

It has been recently confirmed in Federal Circuit jurisprudence that this should be interpreted narrowly, yet the notion of “obtaining market benefit beyond that which inheres the statutory patent right” does seem to leave some leeway to address more than pure competition issues. Even then, however, it remains a mere defensive tool, and appears to be limited to “a handful of specific practices by which the patentee seemed to be trying to 'extend' his patent grant beyond its statutory limits".

A general application of the concept seems to have been excluded from the notion, while a number of cases are explicitly excluded from patent misuse under 35 U.S.C. 271 (D). Patent misuse will be sanctioned by the unenforceability of the patent until the misuse has stopped.

Inequitable conduct
The US notion of ‘inequitable conduct’ can be inspiring to our study as well. Inequitable conduct in general means the failure of an applicant to exercise his duty of candour and good faith to the patent office; the USPTO.70 This notion is thus closely linked to the idea of tackling abusive pre-grant behaviour. If a patent applicant has failed to provide certain prior art information or submitted false information to the patent office, the patent will be declared unenforceable.

The patent cannot be declared invalid on this basis and it has in fact been infringed, yet inequitable conduct in the course of the procedure will make it unenforceable. Unlike with patent misuse, this will be permanent. Like with patent misuse, it is however only a defence mechanism. This means that the deterring effect on third-parties of the patent obtained in an abusive manner will to a large extent remain. Proof of inequitable conduct, finally, has been set quite strictly. A “mere showing that art or information having some degree of materiality was not disclosed”, is not enough71.72

Abuse of patent rights
After having seen what is being used already, we now move to investigating our proposal: introducing the notion of abuse of patent rights. Going back to the categorisation we made in the introduction, and linking this to the country studies above, it is now indeed have to check whether or not the notion of abuse of rights is usually broad enough to cover all the said cases:
  • Can abuse of rights be used to tackle uses of a patent that are abusive towards a specific third-party?
  • Can abuse of rights be used to address instances where a patent is being used against the rationale of the system?
  • Can abuse of rights be used when a patent is being used against higher ends, i.e. the benefit of society as a whole?

The answers to all three questions a priori appears to be in the affirmative. The above discussed notions of abuse of rights in civil law slightly differ amongst the studied countries. Yet, it can be noted that whether it is derived from the provisions of good faith or from extra-contractual liability, abuse of rights covers cases where:
  • third-parties are affected with or without an intention to cause damage; as well as
  • cases where a right is being used against its rationale or its social function.
Whereas the notion may thus appear broad enough to cover the three groupings in most systems, it is however not clear whether it offers an adequate relief to each of them. Also, it may often appear difficult to prove when, for instance, a patent is being used in a way that goes against the rationale of the patent system, which aims at incentivising innovation.

A specific issue of patent law finally shows in distinguishing the cases (and their effect) amongst whether the ‘abuses’ root in the pre-grant phase – before the actual grant of the right – whether they originate post-grant; or whether they are mixed.

Consequently, three questions will be addressed in the discussion:
  • Can the notion – in relation to abuse of the system’s rationale or ‘higher ends’ – really be used in practice or would one stumble on the difficulty to bring evidence that is more than anecdotal or equivocal?
  • For which cases is the usual remedy of abuse of rights – the curtailment/limitation of the use of the right – adequate and for which is it not? Or, alternatively, could the abuse of rights also lead to the revocation of the patent?
  • Can the notion apply to both pre- and post-grant issues; and if so, which of both types of cases would it be able to tackle efficiently (in light of the above)?
Secondly, post-grant issues are the ‘natural habitat’ of the abuse of rights notion. Before being able to abuse a right, one must have acquired it. Following the usual application of abuse of rights as discussed above, one could not count on the notion to be applicable to pre-grant abuses. However, the specific context of patent law, the emphasis on third-parties appeal and the lack of strong pre-grant checks by the institution granting the rights may require a broad interpretation of the notion to include such cases. Abuse of rights is applied differently in the field of law. It is essentially a flexible notion, and in patent law no prior jurisprudential guidance exists.

Abuse Of Patent Rights Applied: Evergreening Of Patents

A situation often referred to as an abuse of the patent system is the so-called evergreening of patents. It can be described as follows: shortly before a patent expires, one re-applies a slightly different version of the invention to restart another 20 years of protection for what is in fact the same subject matter.

Mostly, this scenario is encountered in the medicinal field:
“the evident commercial strategy of innovative drug companies to evergreen their products by adding bells and whistles to a pioneering product even after the original patent for that pioneering product has expired”.

The evergreening of patents is not limited to this field, yet is particularly present here due to the increasing number of patentable drug properties.

In the evergreening scenario, competitors will thus not be able to place a generic version of the product on the market even after twenty years - as should be the case. The compromise that has lead to rewarding innovation with a time-limited monopoly is disregarded. The duration of a patent is extended by another 20 years, although innovation did not occur:

“In particular, strategy documents of originator companies confirm that some of them aimed at developing strategies to extend the breadth and duration of their patent protection. Filing numerous patent applications for the same medicine (forming so called "patent clusters" or "patent thickets") is a common practice. Documents gathered in the course of the inquiry confirm that an important objective of this approach is to delay or block the market entry of generic medicines”.

Issues of evergreening exist on various levels. The first level covers non-legal, practical analysis and impact assessment issues. The second is about the legal basis to address the matter. The first level goes beyond the scope of this article, but is nonetheless worth mentioning. It brings about questions on how to distinguish real cases of evergreening from genuine innovation (a matter of case-to-case, non-legal analysis) and on the concrete realm and impact of the phenomenon (a matter of quantitative and qualitative patent data analysis). We only address the second level of issues here: legal matters.

The evergreening of patents essentially calls for pre-grant intervention: it should simply not happen. Patent officers must be able to assure the quality of the patents they grant.

Available remedies
Third parties faced with patents suspected of evergreening have several options. Either they do not enter the field protected by the evergreened patent – the worst scenario – or they simply ignore the patent at stake and do enter the field.

Two possibilities can be outlined:
  1. The patent holder may only have been speculating on the deterrent effect of his patent. In the knowledge that it would not stand in an invalidity procedure, the patent holder would then simply not initiate an infringement procedure.
  2. Or, an uncertain procedure starts. The patent holder will challenge the competitors or other third parties which ignored the patent. Here:
    • A patent law-internal challenge will most likely bring an invalidity counterclaim. This may however not necessarily bring the patent owner to the losing camp. We will see below that the patentability requirements will not necessarily lead to invalidation. Inventiveness could be invoked, but this will depend on how this notion is applied in the given jurisdiction.
    • Rather, competition law elements may in fact appear the most ready. Both unfair competition and the abuse of monopoly positions could be used to tackle the effects of an evergreening patent.
      Yet, one must then first fulfil their internal criteria of application (e.g. the proof of a dominant position), and it remains unclear to which extent the use of unfair competition is in fact allowed in relation to IP issues.
    • Finally, the abuse of rights notion or – in the United States – the patent misuse or inequitable conduct doctrines could be used.

Patent law
Inventors intending to evergreen their patent rights make use of the fact that, for patent law, inventions can be novel, inventive and industrially applicable (and hence patentable) without achieving substantial progress. Inventions must in fact not solve an existing problem or improve a given invention.

There is no ‘solving an unsolved problem’ requirement. This allows, for instance, for the patenting of different processes leading to the same result. It is therefore in fact a legitimate feature of the patent system. Although not solving an unsolved problem a priori, these processes and methods nonetheless bring about progress. If used strategically however, the said mechanism can lead to situations such as the evergreening of patents.

For this reason, India decided to explicitly exclude new dosages and different forms of the same medicine such as capsules, tablets, syrups, and suspensions from patentability, as well as more generally every known substance which does not result in the enhancement of the known efficacy thereof. Salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substances will be considered to be the same substance, unless they differ significantly in properties regarding efficacy. This is a purely pre-grant intervention, however also allowing later invalidity (counter) claims to be successful post-grant. Perhaps this is the most recommendable approach, yet as we’ll see later, doubts as to the TRIPs compatibility of the measures arise.

Competition law
In the post-grant phase, classical elements to redress an abusive use of certain patents are to be found outside of patent, in competition law. We discuss below the European example to see whether abuse of dominant position and/or unfair competition is suited to address the matter of evergreening.
  1. Abuse of dominant position
    Under EU law, a dominant position is reached when
    “a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained in the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of consumers”.

    The main factors here appear to be the size of market shares, economic weakness of competitors, and the control of resources and technologies. Abuses of dominant positions are ruled by the European Court of Justice (ECJ) as being objective concepts; the “recourse to methods different from those which condition normal competition in products and services on the basis of the transactions of commercial operators”, resulting in the reduction of competition in a market already weakened by the company concerned.

    Examples here include imposing unfair prices or other unfair trading conditions; limiting production, markets or technical development to the prejudice of consumers; applying dissimilar conditions to equivalent transactions with other trading parties; and imposing supplementary obligations which have no connection with the purpose of the contract.

    Depending on what is considered to be the ‘relevant market’, a patent holder may be deemed to have a dominant position. However, a patent alone cannot lead to a presumption of a monopoly or dominant position. It is an ownership right. It is still the market deciding on whether or not there is a monopoly, and not the eventuality of patents. Patents in fact do not decide on markets per se. Yet, they do help shaping them.
  2. Unfair competition
    The notion of unfair competition primarily aims at ensuring fairness in business operations and is meant to fulfil the need that all market participants should play in accordance with the same rules. Unfair competition is one the few competition law features to have entered into international law. Under Article 2.1 of the WTO TRIPS Agreement, which incorporates Article 10bis of the 1883 Paris Convention, unfair competition forms part of WTO law.

Although under Article 10bis of the Paris Convention, the concept seems limited to direct and indirect (potential and future) competitive relationships, unfair competition notions essentially protect against unfair business practices and therefore not compulsorily call for a competitive relationship. The concept could equally be invoked to protect consumer’s interests and those of the public or the economy at large. In the EU, unfair business-to-consumer practices can for instance be found in acts that are contrary to the behaviour of professional diligence and in behaviour that has an adverse impact on the economic activities of the average consumer (especially when this practice is misleading and aggressive).

Again, the evergreening of patents appears to fit the description, perhaps even more easily than that of abuse of monopoly rights. However, it is debated to what extent unfair competition can be invoked in patent law cases, since patent law would be the lex specialis. Both would be mutually exclusive.

Abuse of patent rights
Evergreening patents slip through the mazes of the legal net. They are hard to challenge since they move along the borderline between the legal and the illegal, yet, they are definitely illegitimate. This is exactly the type of case for which the notion of abuse of rights has been designed in other fields of law.

The evergreening of patents constitutes a case-study which could fit into each of the three groupings of our previously established typology of patent misuses, and thus upon each of the three elements that could constitute or border the abuse of patent rights notion:
  • an abuse in relation to specific third-parties (e.g. competitors, consumers);
  • an abuse in view of the rationale of the patent right and the patent system (by re-claiming 20 years of protection without having innovated); and
  • an abuse possibly also against higher ends, because the society as whole would not benefit from that patent anymore. We think in particular of access to medicines and the human right to health. Both are reportedly favoured and hindered by the grant of patents, yet this balance may shift the wrong way if patent protection goes up to 40 years.
The abuse of rights thus provides a fundamental tool to actively challenge evergreening patents outside of the validity angle and outside of the competition law realm. Since both are often hard to impose, abuse of rights may have a potential here. Evergreening is however not the issue which most obviously calls for the introduction of abuse of rights, since it should ideally have been tackled by the patent office itself, by not granting evergreening patents. Despite their often dubious strength in eventual invalidity procedures, the mere existence of ‘evergreening’ patents will first discourage generic competitors from entering the market.

At the very least, it will delay entry. In the United States, for instance, manufacturers of generic pharmaceutical products must notify the holder of the expiring patent that they will launch a certain product onto the market. Automatically and obligatorily informed, patent holders will then threaten eventual competitors with (and may even file a case on the basis of) the newly acquired ‘evergreening’ patents. This creates costs, uncertainty and has an unjustified deterring effect. Avoiding this, means avoiding that the patent is granted.

Abuse Of Patent Rights Applied: Transit Of Generic Medicines

The year is 2009. Dutch border authorities stop, seize and destroy or send back shipments of medicines in transit in The Netherlands. The shipments are on the way from India to Brazil, Venezuela, Colombia, Peru or Nigeria. Neither in the producing country, nor in the receiving county, the medicines were subject to patent protection. In the Netherlands – the transit country – they were. Pharmaceutical giant Merck, one of the patent holders at stake, first requested the seizure of a shipment of the drug Losartan on the way from India to Brazil.

This started a cascade of 19 similar cases. Whereas in the first case, the drugs were reshipped to India, in later cases the drugs were sometimes destroyed. It was also not always a mere private initiative. Although GlaxoSmithkline, for instance, first claimed its patent rights, the Dutch customs proceeded against its later withdrawal and sent to the criminal prosecutor in charge a case involving a shipment of Abacavir on route on behalf of UNITAID.

The matter of the drugs in transit caught quite some attention in the past two years. From a patent law perspective – unless one challenges the very idea of granting patents for medicines in developed countries – this is a purely postgrant case. It is not rooted in the way the patent has been granted, but in the way it is being enforced. We are faced with a case where the patent is legal, the enforcement is within the legal framework; but the result appears illegitimate. At first glance, this seems to be another classical setting where the abuse of right notion could be useful.

Laws and issues
The legal basis for these decisions was the Council Regulation (EC) n° 1383/2003, as incorporated into the Dutch Patent Act. This Regulation addresses customs actions against goods suspected of infringing certain intellectual property rights. It aims in particular at keeping off the market counterfeit and pirated goods, “because of the considerable damage to law-abiding manufacturers and traders and to right-holders, as well as the deceiving and in some cases endangering effect to the health and safety of consumers”. It is explicitly mentioned that this should however be done without impeding legitimate trade. In general, the Regulation applies to goods which are entered for release for free circulation, export or re-export.

In Article 2 of the Regulation ‘goods infringing an intellectual property right’ means goods which infringe a patent under that Member States’ law. If - goods are suspected of infringing an intellectual property right, the Regulation allows customs authorities to suspend the release of the goods or detain them for a period of three working days from the moment of receiving the notification by the right-holder.

This is done in order to enable the latter to submit an application for action in relation to such goods. Authorities shall suspend the release of the goods or detain them when an application for action has then been initiated, while a number of deterrents have been set in place to avoid a frivolous use of said custom measures. The claimant can be held liable and bear all costs if the goods in question are subsequently found not to infringe intellectual property right.

Abuse of patent rights
From an abuse of rights point of view, the matter appears to offer a good case study. It also introduces a new angle to the debate: the application of abuse of rights amongst treaty parties. Whereas indeed the enforcement of patents on goods in transit may be abusive amongst private actors, the above discussed obligations of international law involving EU Regulation, the Dutch judgement, and the active engagement of Dutch custom authorities may point - at an abusive use of the TRIPs enforcement provisions amongst WTO member countries as well. This conclusion leads us to analyse the application of the principle of good faith in international law, which will be discussed in the section below.

The abuse of rights notion could have been an argument to tackle the procedures in the Netherlands. The request to seize and destroy goods in transit only – medicines on the way between countries where no patent protection was granted – may well be construed as an abuse of patent rights.

As with the evergreening of patents, the case here could be based upon each of the three elements which we have identified to constitute the border of the abuse of patent rights notion:
  • an abuse in relation to specific third-parties (e.g. producers of generic medicines, consumers);
  • an abuse in view of the rationale of the patent right and the patent system; and
  • an abuse also against higher ends; access to medicines and the right to health.

The notion of abuse of rights can be a useful tool to tackle a number of cases reported to be undesired in patent literature. Its flexible nature perfectly matches that of the patent system itself. Not all issues can however be addressed by this notion and not all issues – although in theory challengeable from this angle – need the abuse of rights notion. Cases rooting in post-grant issues which can satisfactorily be addressed by competition law, for instance, do not need the notion. Abuse of rights is thus only aimed at filling a gap of lacking means for legal challenge.

Abuse of rights does not usually lead to the revocation of the right at stake. This would however be necessary in the case of evergreening patents. Whereas the notion could be used for abuses rooting in the pre-grant phase, the usual remedy would thus not be appropriate in these cases. Additionally, it would come too late. Abuse of rights therefore mainly is a tool to address post-grant abuses, in cases where competition law does not intervene. Nonetheless, a patent law specific tailoring of the notion and its sanction
seems to be possible.

The transit of medicines case exemplifies a theoretically legal but illegitimate enforcement - the classical subject matter of abuse of rights. The study on the evergreening of patents shows that this in fact must be tackled pre-grant, but that in practice it amounts to post-grant action. Here, abuse of rights is useful. For international law, the case studies can serve as background information to the ceilings debate. Abuse of rights can be used a mechanism used to screening for the necessity for changes in the positive law. The case study on medicines in transit in fact showed the need for a ceiling in this respect specifically.

The possibility to use the notion of abuse of rights also brings a further tool to deal with a number of cases in a TRIPs compliant manner - it offers an additional and underused flexibility. Finally and most importantly, an interpretation of the TRIPs Agreement in good faith, may mean that certain interpretations leading to a ever higher level of protection constitute an abuse of rights. It may mean that ceilings are silently present in the Agreement already; that abuse of rights – as a substantive rule – is a ceiling to the TRIPs Agreement.

  1. Indian Patents Act 1970.
  2. Hoffman La Roche Ltd V Cipla decided in I.A 642/2008 IN CS (OS) 89/2008F
  4. Roche vs. CIPLA is another such case where a Court in India has heavily considered ‘public interest’ while granting temporary injunction.
  6. Memorandum of Understanding between Ministry of Commerce and Industry of India and The Federal Department of Economic Affairs of Switzerland on Intellectual Property 7th August 2007.
  7. Article 1 of MOU between Ministry of Commerce and Industry of India and The Federal Department of Economic Affairs of Switzerland on Intellectual Property 7th August 2007.
  8. Patent Cooperation Treaty done at Washington on June 19 1970 amended on September 28,1979,modified on February 3 1984 and on October 3 2001.
  9. WTO, Agreement on Trade Related Aspects of Intellectual Property Rights, Annex C available at, visited on May 26, 2008.
  10. Biswajit Dhar, Post 2005 TRIPS Scenario in patent protection in the pharmaceutical sector: the case of generic pharmaceutical industry in India available at Pharma%20November06.pdf.
  11. Article 8 specifically states that member countries may adopt measures necessary to protect their public health and nutrition and to promote public interest in sectors of vital importance to their socio-economic and technological development.

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