L A B U 5: C I: Egal Spect of Usiness

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LEGAL ASPECT OF BUSINESS

UNIT 5: CONSUMER PROTECTION ACT AND


INTRODUCTION OF CYBER LAW

Prepared and presented by,


N. Ganesha Pandian,
Assistant professor,
Madurai school of management,
Madurai.
CONSUMER PROTECTION ACT,1986
INTRODUCTION

 The consumer protection act, 1986 is one of the most


beneficent legislations of recent times and it is intended to
protect the legitimate interest of the consumers against
traders, suppliers and etc.,

 The consumer protection act is intended to protect the


legitimate interest of the consumers against traders, suppliers
etc.,

 The consumer protection act 1986, has opened up a new era


in the field of business in India
AIMS AND OBJECT OF THE CONSUMER
PROTECTION ACT,1986

1. Better protection of interests of consumers


2. Protection of rights of consumers
i. right to be protected
ii. right to be informed
iii. right to be assured
iv. right to be heard
v. right to seek redressal
vi. right to consumer education
vii. right to healthy environment
3. Consumer protection council

4. Quasi-judicial machinery for speedy redressal of


consumer disputes

i. To give relief of a specific nature

ii. To award wherever appropriate, compensation to


consumers
SALIENT FEATURES OF THE CONSUMER
PROTECTION ACT,1986

1.Principle of compensation

i. District level

ii. State Level 7. Effective safeguard to consumer

iii. National level 8. Class action

2.Consumer councils 9. Check on unfair trade practices

3. Goods and services are covered 10. Inexpensive redressal

4. Rights of consumers machinery

5. Convenient procedures 11. Price

6. Filing of compliant 12. Social welfare legislation


NEED FOR CONSUMER PROTECTION
1, Sellers dominate the market

2, sellers are known to adopt unfair trade practices like adulteration, using
false weights and measures, making exaggerated claims about the
quality of their products or services

3, Buyers do not have adequate education to evaluate products regarding


their genuineness

4, Buyers are generally careless and indifferent to their own interest

5, Buyers do not feel strong enough to protect themselves. They prefer to


accept defective goods rather than returning them
SHORT TITLE, EXTENT, COMMENCEMENT AND
APPLICATION (SECTION 1)
DEFINITIONS
1. Commercial purpose: commercial purpose means, “any purpose
whose primary objective is to make profit”

2. Complainant[section 2(1)(b)]: The section provides that complainant


may be:

i. A consumer; or

ii. Any voluntary association registered under companies act 1956

iii. The central government or any state government

iv. One or more consumers where there are numerous consumers


having same interest

v. In case death of consumer, a legal heir or representative


3. Complaint [section 2(1)(c)] – Complaint means “any
allegations made in writing by a complaint that:

Unfair trade practices, defect in goods, defect in services,


price variation, hazardous goods

4. Consumer dispute [section (1)(e)] – Consumer dispute


means “ a dispute where the person against whom a
complaint has been made, denies or disputes the
allegations contained in the complaint”
5. “Defect” in goods [section 2(1)(f)] – Defect is defined as, “
any fault, imperfection, shortcoming in the quality, quantity,
potency, purity or standard which is required to be
maintained by or under any law for the time being in force
or is claimed by the trader in any manner whatsoever in
relation to nay goods”

6. Deficiency in service [section 2(1)(g)] – Deficiency means


“any fault, imperfection, shortcoming or inadequacy in the
quality, nature and manner of performance required to be
maintained”
7. Goods [section 2(1)(i)]

8. Manufacturer [section 2(1)(j)]

9. Person [section 2(1)(m)]

10. Service [section (1)(o)] – Service is defined to mean,


“service of any description which is made available to
potential users and includes the provision of facilities in
connection with service industry or other information”

11. Spurious goods [section 2(1)(oo)]

12. Trader [section 2(1)(q)]


CONSUMER RIGHTS

i. right to be protected

ii. right to be informed

iii. right to be assured

iv. right to be heard

v. right to seek redressal

vi. right to consumer education

vii. right to healthy environment


CONSUMER DUTIES
1. Duty to be careful

2. Duty to insist on information

3. Duty to inspect goods

4. Duty to form association

5. Duty to make complaint

6. Duty to aware of rights


CONSUMER DISPUTES

 Unfair trade practices [section 2(1)(r)] –


1. Misleading advertisement and False representation
2. Bargain scale
3. Offering gifts, prizes, etc., and conducting contests or
lottery
4. Not conforming to prescribed standards
5. Hoarding or destruction of goods
6. Manufacture of spurious goods
RESTRICTIVE TRADE PRACTICES [SECTION
2(1)(NNN)]
 “Restrictive trade practice means a trade practice which
tends to bring about manipulation of price or its condition
of delivery or to affect flow of supplies in the market
relating to goods or services in such manner as to impose
on the consumers unjustified costs or restrictions”
CONSUMER PROTECTION COUNCILS

Central consumer protection council [section 4]

1. Establishment: Section 4 empowers the


establishment of a Central consumer protection
council

2. Membership: 1. Minister in charge of consumer


affairs 2. Such no. of other official and non
officials representing such interest
According to rule 3 of the consumer protection rules, 1987, the central council shall
consists of 150 members as follows

1. The minister in charge of consumer affairs

2. The minister of state or deputy minister in the department of civil supplies

3. Minister-in-charge of consumer affairs in state

4. 8 MP’s, 5 from Lok sabha, 3 from Rajya sabha

5. The commissioner for SC and ST

6. Representatives from various organizations not exceeding 20

7. Representatives of the consumer organizations – not less than 35

8. Representatives of women – not less than 10

9. Representatives of farmers, trade and industries – not exceeding 20

10. Representatives of representing consumer interests – not exceeding 15

11. The secretary in the department of civil supplies


STATE CONSUMER PROTECTION COUNCIL
[SECTION 7 & 8]

 Establishment [section 7]

 Membership - 1. Minister in charge of consumer


affairs of state 2. Such no. of other official and non
officials representing such interest

 Meetings

 Time and place of meetings and procedure

 Objects of state council [section 8]


DISTRICT CONSUMER PROTECTION COUNCIL

 Establishment [section 8-A]

 Membership – 1.The collector of the district 2. Such


no. of other official and non officials representing
such interest

 Meetings

 Time and place of meetings and procedure

 Objects of state council [section 6(a) to (f)]


PROCEDURE FOR CONSUMER GRIEVANCE
REDRESSAL

 Who can file complaint under the Consumer


protection act,1986

1. A consumer

2. Any voluntary consumer association

3. The central government

4. Any state government

5. One or more consumers having same interest


DOCUMENTS FOR FILLING COMPLAINT

1. Complaint

2. List of documents

3. Vakalatnama

4. Application for condonation of delay (if any)

5. Affadavit

6. Documents

7. Application for injunction (if any)


PROCEDURE FOR COMPLAINT UNDER THE ACT
Entitlement of file complaint

Recognized consumer Association

Procedure to be followed at District


forum or state commission

Procedure applicable to National


commission

Limitation period for Filing of


compliant
RECOGNIZED CONSUMER ASSOCIATION

 A recognized consumer association means any


voluntary consumer association registered under
the companies act, 1956 or any other law for the
time being in force
PROCEDURE TO BE FOLLOWED AT
DISTRICT FORUM OR STATE COMMISSION
 Section 13 lays down the procedure to be followed

1. Complaint copy sent to opposite party and directing him


to reply within 30 days or 45 days

2. If opposite party admits the allegations, then complaint


will be based on material on record

3. If opposite party denies – Relating to any goods


sec13(1)(c)

Relating to goods not requiring testing – sec 13(2)(b)


PROCEDURE TO BE FOLLOWED
AT NATIONAL COMMISSION
 Section 22 lays down the procedure to be followed at the
national commission

1. A complaint containing : a, Name description and


address of complaint b, Name description and address
of opposite party c, facts relating to complaint d,
Documents in support e, The relief claim

2. National commission then follow procedure contained in


sec13(1) & (2)
 The commission shall decide as soon as possible within 3
months from date of receipt of notice by opposite party or
5 months where no testing or analysis req.

 No appeal has been prefer against the order passed by


the national commission
PROCEDURE FOR FILING THE APPEAL

 Procedure in respect of goods where the defect


alleged requires no testing or analysis

 Procedure in respect of goods where the defect


alleged requires testing or analysis

 If the complaint relates to goods in respect of which


the aforesaid procedure cannot be followed or if the
complaint relates to any service
TYPES OF CONSUMER REDRESSAL
MACHINERY AND FORUMS

Consumer Redressal machinery and Forums


under COPRA

District forum
For dealing cases involving up to Rs. 20 lac

State commission
For dealing cases involving Rs. 20 lac and less
than one crore

National commission
For dealing cases involving more than one crore
COMPETITION ACT 2002
INTRODUCTION
 Indian government enhancing its thrust on globalization and opened
up its economy removing controls and resorting to liberalization

 The ambit of MRTP Act inadequate for fostering competition in the


market and eliminating anti-competitive practices in national and
international trade, the government of India in October 1999
appointed a high level committee on competition policy and law (the
Raghavan committee) to advise on the competition law

 Acting on the report of the committee, the government enacted the


new competition act,2002 which has replaced earlier MRTP act,1969
OBJECTIVES OF THE COMPETITION ACT
1. To shift the focus from curbing monopolies to promoting competition.

2. To ensure fair competition in India by prohibiting trade practices which


causes adverse effect on competition in markets within India.

3. To establish a quasi-judicial body to be called the Competition


commission of India

4. To curb negative aspects of competition

5. To promote and sustain competition in market

6. To protect the interests of consumers

7. To ensure the freedom of trade carried on in India

8. To create a fund called competition fund


FEATURES OF COMPETITION ACT
 Competition commission of India (CCI) to be established

 Repeal of MRTP act and dissolution of MRTPC

 Pre-merger notification made optional

 Prohibition of abuse of dominance position

 Pending cases of MRTPS to be transferred to CCI

 Pending unfair trade practices to be covered under Consumer

protection Act, 1986

 Competition fund to be created


MAJOR AREAS OF COMPETITION ACT,2002

 Prohibition of anti-competitive agreements

 Prohibition against abuse of dominant position

 Regulation of combinations

 Advocacy of competition policy


ANTI-COMPETITIVE AGREEMENTS
Section 3 of the act provides

1. Determining sale price or purchase price directly or indirectly

2. Limiting or controlling production, supply, markets, technical


development or investment

3. Sharing markets or resources of supply by territory, type, size or in any


other manner

4. Bid rigging or collusive bidding

5. Tie- in arrangement

6. Exclusive supply agreement

7. Refusal to deal

8. Resale price maintenance


ABUSE OF DOMINANT POSITION
 According to section 4 of act, no enterprise shall abuse its dominant
position. An abuse of dominant position is said to occur when an
enterprise:

1. Directly or indirectly imposes unfair or discriminatory purchase of


selling prices on condition, including predatory prices;

2. Limits production, markets or technical development to the prejudice


of consumers;

3. Indulges in action resulting in denial of market access

4. Makes the conclusion of contracts subject to acceptance by other


parties

5. Uses dominance in one market to move into or protect other markets


DETERMINING MARKET DOMINANCE
 For the purpose of determining whether an enterprise enjoys dominant position or
otherwise, one or more of the following factors may be taken into account:

1. Market share

2. Size and resources of enterprise

3. Size and importance of competitors

4. Economic power of enterprise

5. Technical advantages enjoyed by firm

6. Dependence of consumers

7. Monopoly status

8. Entry barriers

9. Countervailing buying power

10. Market structure and size and relevant factors


REGULATION COMBINATIONS

 Section 5 of the act stipulates that any person who proposes


to enter into an agreement or combination shall give a notice
to commission within 7 days

1. The board of directors of respective companies accepting a


proposal of merger

2. The conclusion of negotiations of an agreement for an


acquisition or acquiring control;

3. The execution of a joint venture agreement or shareholder


agreement or technology agreement
COMPETITION COMMISSION OF INDIA

 Section 7 to 17 under chapter III provides for the


establishment, compositions, term, resignation,
removal, restriction on the employment of
chairperson, his salary and powers

1. Establishment of commission

2. Composition of commission – not less two or not


more than ten appointed by central government
DUTIES OF COMPETITION COMMISSION OF
INDIA

1. To eliminate practices having adverse effect on competition

2. To promote and sustain competition

3. To protect the interest of consumers

4. To ensure the freedom of trade carried on by other


participants, in markets in India

5. To make inquires into certain agreements and dominant


positions of enterprise and about combination
POWERS OF COMPETITION COMMISSION OF
INDIA

 Power to grant interim relief (sec 33)

 Power to award compensation (sec 34)

 Power of commission to regulate its own procedure


(sec 36)

 Review of orders of commission (sec 37)

 Rectification of orders (sec 38)


OFFENCES AND PENALTIES
 Contravention of orders of commission (section 42) – one year term
in civil prison or 10 lac rupees or both

 Penalty for failure to comply with directions of commission and


director general (section 43) – Rs one lac for each day during such
failure continues

 Penalty for making false statement or omission to furnish material


information (sec 44) – Not less than 50 lac to on crore

 Penalty for offences in relation to furnishing of information (section


45) – extended to 10 lac
COMPETITION LAW RELATING TO CONSUMER
PROTECTION

Some of the objectives like:

1. Static efficiency

2. Dynamic efficiency

3. Competition laws can be used to attain consumer


welfare

4. Result in satisfaction in trade


CYBER LAWS
INTRODUCTION

 Cyber law is a generic term which refers to all the


legal and regulatory aspects of internet and the
world wide web

 The growth of cyber space has resulted in the


development of a new and highly specialized
branch of law called CYBERLAWS –Laws of the
Internet and the world wide web
CYBER LAWS IN INDIA

 In may 2000, both the houses of the Indian


parliament passed the information technology bill.
The bill received the assent of the president in
August 200 and came to be known as the
Information technology Act, 2000.

 This Act aims to provide the legal infrastructure for


e-commerce and a framework so that legal sanctity
is accorded to all electronics records
HIGHLIGHTS OF THE ACT
 Chapter II of act specifically stipulates that any subscriber may

authenticate an electronic record by affixing his digital

signature

 Chapter III of the act details about Electronic governance

 Chapter IV of the act gives a scheme for regulation of certifying

authorities

 Chapter VII of the act details about the scheme of things

relating to Digital signature certificate


 Chapter IX of the act talks about Penalties and
adjudication for various offences

 Chapter X of act talks of the establishment of cyber


regulations appellate tribunal

 Chapter XI of act talks about various offences and the said


offences shall be investigated only by a police officer

 The act also provides for the constitution of the Cyber


Regulations advisory committee

 The best way to enforce internet copyright is through the


Digital millennium copyright act
ADVANTAGES OF CYBER LAW
1. IT act 2000 attempts to change outdated law and provides ways to deal with
cyber crimes

2. The Act has proposed a legal framework for the authentication and origin of
electronic records/ communications through digital signature

3. E-mail would be a legal and valid form of communication in context of e-


business

4. Digital signatures have been given legal validity and sanction in the act

5. The act allows government to issue notification on the web – e-governance

6. IT act also addresses the important issues of security

7. The remedy provided by the act is in the form of monetary damages not
exceeding rs. One crore
DISADVANTAGES OF CYBER LAW
 The law misses out completely the issue of Intellectual property
rights, copyrighting, trade marking, or patenting of electronic
information and data

 The law even stays silent over regulation of electronic payment


gateway and segregates the negotiable instrument from the
applicability of IT act

 The act empowers DSP to look up into the investigations and


filing of charge sheets

 The IT act is silent on filming anyone’s personal actions in public


and then distributing it in e-form
INFORMATION TECHNOLOGY ACT, 2000
INTRODUCTION
 E-commerce is fast growing form of carrying out business transactions.

 Any business transaction has to pass through several stages to be given


effect to.

 Each stage consists of various types of exchange consists of various


types of exchanges between two sides:

1. Information

2. Documents

3. Goods

4. Services

5. Money , etc.,
OBJECTIVES OF IT ACT 2000
 To grant legal recognition for transaction carried-out by
means of electronic data interchange .
 To give legal recognition to digital signature for
authentication of any information.
 To facilitate electronic filing of documents.
 To facilitate electronic storage of data.
 To facilitate and give legal sanction to electronic fund
between bank and financial institution.
 To give legal recognition for keeping books of account by
bankers in electronic form.
FEATURES OF THE IT ACT, 2000
 Electronic contracts have been made legally valid if made
through ‘secure electronic communication’.
 Legal recognition has been granted to digital signature.
 Security procedures for electronic records and digital
signatures have been laid down.
 Recognition has been granted to the right of licensed
certifying authorities to issue digital signature certificates.
 The controller is to act as repository of all digital signature
certificates.
 To facilitate e-governance, provisions have been
included to build the required system.
 Various types of computer related crimes have been
defined and stringent penalties provided under this act.
 A procedure has been laid down under the act for
appointment of adjudicating officers for holding enquires.
 A provision has been made under the act for the
establishment of cyber regulatory appellate tribunal and
appeal can be made in high court.
SCOPE AND APPLICABILITY OF IT ACT 2000
 A negotiable instrument (other than cheque) as defined in section
13 of negotiable instrument act 1881
 A power of attorney as defined in section1A of the power of
attorneys act,1882

 A trust defined as defined in sec3 of the Indian trusts act 1882


 A will as defined in clause (h) of section 2 of the Indian
succession act 1925

 Any contract for the sale or conveyance of immovable property

 Any such class of documents or transactions as may be notified


by the central government
DEFINITIONS (SECTION 2)
 Access [section 2(1)(a)]
 Addressee [section 2(1)(b)]
 Asymmetric crypto system [section 2(1)(f)]
 Certification practice statement [section 2(1)(h)]
 Communication device [section (1)(ha)]
 Computer [section 2(1)(i)]
 Computer network [section 2(1)(j)]
 Computer resource [section 2(1)(k)]
 Computer system [section 2(1)(l)]
CONTD…
 Cyber café [section 2(1)(na)]
 Cyber security [section 2(1)(nb)]
 Data [section 2(1)(o)]
 Electronic form [section 2(1)(r)]
 Electronic gazette [section 2(1)(s)]
 Electronic record [section 2(1)(t)]
 Electronic signature [section 2(1)(ta)]
 Electronic signature certificate [section 2(1)(tb)]
 Function [section 2(1)(u)]
CONTD…
 Information [section 2(1)(v)]
 Intermediary [section 2(1)(w)]
 Key pair [section 2(1)(x)]
 Originator [section 2(1)(za)]
 Private key [section 2(1)(zc)]
 Public key [section 2(1)(zd)]
 Subscriber [section 2(1)(zg)]
 Verify [section 2(1)(zh)]
DIGITAL AND ELECTRONIC SIGNATURES
 Digital signature means authentication of any electronic
record by a subscriber by means of an electronic method
or procedure in accordance with section 3
 Section 3 provides that any subscriber may authenticate
an electronic record by affixing his digital signature. The
authentication of the electronic record shall be affected
by the use of asymmetric crypto system and hash
function which envelop and transform the initial
electronic record into another electronic record
DUTIES OF SUBSCRIBERS

 Generating key pair [section 40]

 Acceptance of digital signature [section 41]

 Control of private key [section 42]


ELECTRONIC GOVERNANCE - MODEL
Community Transition
management management
system system

E-Governance

Knowledge Infrastructure
management management
system system
OBJECTIVES OF E-GOVERNANCE
 Build services around citizen’s choice
 Make government more accessible
 Facilitate social inclusion
 Provide information responsibly
 Use government resources effectively
 Reduce government spending
 Deliver online services
 Involve citizen in the governing process
SIGNIFICANCE OF ELECTRONIC GOVERNANCE
 Record-keeping and reduction in files
 Automation of processes
 Effective co-ordination, supervision and integration
 Elimination of hierarchy and delay
 Change towards transparent and accountable
administration culture
 Better quality and effective delivery of public services
 Citizens empowerment
 Helps in taking strategic decision at appropriate time
ELECTRONIC RECORD

 Meaning of electronic record

 Attribution of electronic record

 Acknowledgement of receipt

 Time and place of dispatch and receipt of electronic


record

 Usual place of residence

 Controlling and certifying authority


CYBER CRIMES
 Data diddling surfing(ATM fraud)
 Internet time theft  Social engineering
 Salami slicing  Mail bombing
 Virus attack  Dumpster diving
 Phreaking  Software piracy
 Pornography  Identity theft
 Cloning  Spoofing
 Carding  Phishing
 Piggy-backing or shoulder-  Sniffing
INTRODUCTION OF INTELLECTUAL PROPERTY
RIGHTS
INTRODUCTION
 Every kind of intellectual property is in nature of
intangible property.

 IP is the creation of human intellect. It refers to the


ideas, knowledge, invention, innovation , creativity and
etc.,

 It is similar to property whether it is movable or


immovable. The rights relating to intellectual property is
called “Intellectual property rights”
TRADE RELATED INTELLECTUAL PROPERTY
RIGHTS (TRIPS)

 Seven categories of intellectual property rights:


1. Trade secrets
2. Integrated circuits
3. Geographical indications
4. Industrial design
5. Copyright
6. Trademarks
7. Patents
COPYRIGHTS - MEANING

 Copyrights gives protection for the expression of an


idea and not for the idea itself.

 Copyrights are similar to patents in establishing


ownership and protection for creative endeavor but
they pertain to intellectual property

 The Copyright only prevents the copying of the


content but not the subject matter
VIRTUAL MATTERS UNDER COPYRIGHTS
PROTECTION

1. Photographs 9. Music
2. Poems 10. Audio – Visual works
3. Books 11. Microfilms
4. Motion pictures 12. Sculptures
5. Computer punch cards 13. Stories
6. Choreographic works 14. Sound recordings
7. Paintings 15. Periodicals
8. Articles 16. Pantomimes
17. And etc
OBJECTS OF COPYRIGHT

 Copyrights ensure certain minimum safeguards of


the rights of authors over their creations, thereby
protecting and rewarding creativity

Indian Copyrights act,1957

The copyright act,1957 protects original literary,


dramatic, musical and artistic works and
cinematographic works and sound recordings

Copyrights protect the expressions not the ideas


CLASS OF WORKS
 Section 13(1) – provision of copyrights
 Artistic work – section 2(b)
 Dramatic work
 Literary work – Section 2(o)
 Computer program – section 2(ffc) & 2(ffb)
 Musical work – section 2(p)& 2(ffa)
 Cinematograph films
 Sound recordings Section 2(xx)
TERM/DURATION AND REGISTERATION OF
COPYRIGHTS

 After publication, until 60 years from the beginning of the calendar year
or next following year which the author dies

 The register of copyrights maintained in copyright office of the


Department of education consists of 6 parts

1. Literary works

2. Musical works

3. Artistic works

4. Cinematograph films

5. Sound recordings

6. Computer program, tables and compilations, including computer


databases
TRADE MARKS
 The brand name, label or logo of a company can be
registered as a Trade marks

 Once it is registered then it is protected against the


misuse by third parties

 The registered trademark is a valuable property, which


can be transferred or sold or licensed to third party

 The trademark act 1999, governs this and law


encourages registration of trademark, as registration
confers on the owner as exclusive right to use the mark
MEANING

 Service mark: it means service of any description


which is made available to potential users and
includes the provision of services in connection
with business in any industrial or commercial
matter.

 Good trade marks: Any device or word which has


no direct reference ton the quality or character of
the goods or services is a good trade mark
TRADE MARKS NOT REGISTERABLE

 No trademark shall be registered in respect of


goods, descriptive of goods or a service which is
identical with or deceptively similar to trademark
which is already registered

 Descriptive words, surnames and geographical


names are not register able
PROCEDURE FOR REGISTRATION

 The application is filed

 The application is examined by the trademarks


office and objections

 The marks is advertised in Trademarks journal and


is open to opposition by third party

 The registration certificate is issued in 4-6 months


CONTD…

 Requirements for making an application

 Revocation of registration

 Duration, removal and restoration and registration


REMEDIES IN CASE OF BREACH/OFFENCES AND
PENALTIES RELATING TO TRADEMARKS

 Falsifying the trademarks

 Falsely apply a trademarks

 Making or possessing instruments for falsifying trademarks

 Applying false trade description

 Applying false indication of country of origin

 Tampering with an indication of origin already applied to goods

 Selling goods falsely marked

 Removing piece goods

 Falsely representing a trademark registered

 Falsely describing a place of business as connected with the trademark office

 Falsification of entries in register


PATENT ACT
MEANING OF PATENT

 A patent is, “an exclusive right granted by a country


to the owner of an invention to make use,
manufacture and market the invention provided the
invention satisfies certain conditions stipulated in
law
CONCEPTS
 Characteristics of patent
 Indian patent act 1970
 Invention
 Non patentable inventions
 Application for patents
 Registration of patents
 Revocation of patents [section 64,66 and 85]
 Remedies for infringement [section 108]
 Grant of patent
 Term of patent
THE END

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