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Intermediary Guidelines and Digital Media Ethics Code: Shifting Paradigm of Social & Digital Media Platforms

It has been just over six months since the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (the “Rules“) have been notified. However, these six months have been nothing short of a roller coaster ride for the (Internet) Intermediaries and Digital Media platforms, especially Social Media platforms who have tried to muddle through the slew of compliance obligations now imposed through these eccentric Rules. Notwithstanding, some of them had to face the wrath of the Government and even Courts for the delay in adherence.

On this topic, we are trying to stitch together a series of articles covering the entire gamut of the Rules, including their objective, applicability, impact, and the key issues around some of the rules being declared unconstitutional, etc.

In our first article, we analyse the timeline, objectives, and applicability of these Rules through some of the definitions provided under the Rules and the IT Act.

Tracing the Roots of the Digital Media Ethics Code 

The initiation of this endeavour can be tracked down to July 26, 2018, when a Calling Attention Motion was introduced in the Rajya Sabha on the misuse of social media and spread of fake news, whereby the Minister of Electronics and Information Technology conveyed the Government’s intent to strengthen the existing legal framework and make social media platforms accountable under the law. Thereafter, the first draft of the proposed amendments to the Intermediary Guidelines, The Information Technology (Intermediary Guidelines (Amendment) Rules) 2018, was published for public comments on December 24, 2018.

In the same year, the Supreme Court in Prajwala v. Union of India[1] directed the Union Government to form necessary guidelines or Statement of Procedures (SOPs) to curb child pornography online. An ad-hoc committee of the Rajya Sabha studied the issue of pornography on social media and its effects on children and the society and laid its report recommending the facilitation of identification of the first originator of such contents in February 2020.

In another matter, the Supreme Court of India on October 15 2020, issued a notice to the Union Government seeking its response on a PIL to regulate OTT Platforms. The Union Government subsequently on November 9 2020, made a notification bringing digital and online media under the ambit of the Ministry of Information and Broadcasting, thereby giving the Ministry the power to regulate OTT Platforms.

On February 25, 2021, the Union Government notified the much-anticipated Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, bringing various digital entities under its purview and imposing new compliances to regulate them.

 

Objectives of the Digital Media Ethics Code

The rising internet and social media penetration in India raises concerns of transparency, disinformation and misuse of such technologies. The Rules address these concerns and bring accountability to social and digital media platforms by mandating the setting up of a grievance redressal mechanism that adheres to statutory timeframes. The Rules also address the legal lacuna surrounding the regulation of OTT platforms and the content available on them and introduces a three-tier content regulation mechanism.

Key definitions and the applicability of the Digital Media Ethics Code

The Rules add on extensively to the 2011 Intermediary Guidelines and also introduce new terms and definitions. To understand the Rules and the compliances thereunder in a holistic manner, it becomes imperative to learn the key terms and definitions. This also addresses concerns of applicability of the Rules to different entities, as they prescribe different sets of compliances to different categories of entities.

Key definitions:

Digital Media as per Rule 2(1)(i) are digitised content that can be transmitted over the internet or computer networks, including content received, stored, transmitted, edited or processed by

  • an intermediary; or
  • a publisher of news and current affairs content or a publisher of online curated content.

This broadly includes every content available online and every content that can be transmitted over the internet.

Grievance as per Rule 2(1)(j) includes any complaint, whether regarding any content, any duties of an intermediary or publisher under the Act, or other matters pertaining to the computer resource of an intermediary or publisher as the case may be.

Intermediary has not been defined in the Rules, but as per S. 2(1)(w) of the IT Act, intermediary, with respect to any particular electronic record, is any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes.

The first part of the definition lays down that an Intermediary with respect to an electronic record, is any person that receives, stores or transmits that electronic record on behalf of another person.

An entity becomes an intermediary for a particular electronic record if that record is received by, stored in or transmitted through the entity on behalf of a third party. However, as the clause does not use the term “collect” with respect to an electronic record, any data that entities may collect, including IP Addresses, device information, etc., do not fall within the definition’s purview. Hence the entities would not be considered as intermediaries for such data.

Moreover, the second part of the definition lays down that those entities that provide any service with respect to an electronic record would be intermediaries. However, what constitutes “service” has been a key point of discussion in prior cases. In Christian Louboutin Sas v. Nakul Bajaj[2], the Court not only held that the nature of the service offered by an entity would determine whether it falls under the ambit of the definition, but also went on to hold that when the involvement of an entity is more than that of merely an intermediary, i.e., it actively takes part in the use of such record, it might lose safe harbour protection under S. 79 of the Act.

The definition also includes telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places, and cyber cafes as intermediaries. In Satish N v. State of Karnataka[3], it was held that taxi aggregators like Uber are also intermediaries with respect to the data they store. Therefore, Telecom Service Providers like Airtel, Vi, Jio, etc., Network Service Providers like Reliance Jio, BSNL, MTNL, etc., Internet Service Providers like ACT Fibernet, Hathaway, etc., Search Engines like Google, Bing, etc., Online Payment gateways like Razorpay, Billdesk etc., Online Auction Sites like eBay, eAuction India, etc., Online Market Places like Flipkart, Amazon etc. are all considered intermediaries.

Social Media Intermediaries as per Rule 2(1)(w) is an intermediary which primarily or solely enables online interaction between two or more users and allows them to create, upload, share, disseminate, modify or access information using its services. This includes platforms like Tumblr, Flickr, Diaspora, Ello, etc.

Significant Social Media Intermediaries as per Rule 2(1)(v) is a social media intermediary having number of registered users in India above such threshold as notified by the Central Government. Currently, the threshold is 5 million users. Platforms that fall under this category would be Facebook, Twitter, Instagram, YouTube, Snapchat, LinkedIn, WhatsApp, Telegram etc.

News & current affairs content as per Rule 2(1)(m) includes newly received or noteworthy content, including analysis, especially about recent events primarily of socio-political, economic or cultural nature, made available over the internet or computer networks, and any digital media shall be news and current affairs content where the context, substance, purpose, import and meaning of such information is in the nature of news and current affairs content. Therefore, news pieces reported by newspapers or news agencies, shared online, on social media, or on digital media platforms are news & current affairs content. This includes contents of such nature created by any person and shared through social media platforms like WhatsApp, Facebook, Twitter etc. Digital content discussing news and the latest happenings will also come under the purview of this definition.

Newspaper as per Rule 2(1)(n) as a periodical of loosely folded sheets usually printed on newsprint and brought out daily or at least once in a week, containing information on current events, public news or comments on public news. Newspapers like The Hindu, Times of India etc. will fall under this category.

News aggregator as per Rule 2(1)(o) is an entity performing a significant role in determining the news and current affairs content being made available, makes available to users a computer resource that enable such users to access such news and current affairs content which is aggregated, curated and presented by such entity. This includes platforms like Inshorts, Dailyhunt etc.

Online curated content as per Rule 2(1)(1) is any curated catalogue of audio-visual content, other than news and current affairs content, which is owned by, licensed to or contracted to be transmitted by a publisher of online curated content, and made available on demand, including but not limited through subscription, over the internet or computer networks, and includes films, audio visual programmes, documentaries, television programmes, serials, podcasts and other such content. This includes movies and shows available on OTT platforms like Netflix, Prime Video, Disney+Hotstar etc.

Publisher of News and Current Affairs Content as per Rule 2(1)(t) includes online paper, news portal, news aggregator, news agency and such other entities, which publishes news and current affairs. This would include websites/apps such as The Wire, The News Minute, Scroll.in, Dkoding.in, The Print, The Citizen, LiveLaw, Inshorts etc.

While the Rules do not include the regular newspapers or replica e-papers of these newspapers, as they come under the Press Council Act, news websites such as Hindustantimes.com, IndianExpress.com, thehindu.com are covered under the Rules, and the Union Government clarified the same on June 10, 2021. The clarification stated that websites of organisations having traditional newspapers and digital news portals/websites of traditional TV Organisations come under the ambit of the Rules.

This does not include news and current affairs reported or posted by laymen or ordinary citizens online, as the scope is limited only to news publishing agencies.

Publisher of Online Curated Content as per Rule 2(1)(u) is a publisher who performs a significant role in determining the online curated content being made available and enables users’ access to such content via internet or computer networks. Such transmission of online currented content shall be in the course of systematic business or commercial activity. This includes all OTT platforms, including Netflix, Prime Video, Voot, Lionsgate, Disney+Hotstar, etc.

The Digital Media Ethics Code Challenged in Court

Part III of the IT Rules has been challenged by many persons in various High Courts. News platforms including The Wire, The Quint, and AltNews moved to the Delhi High Court, alleging that online news platforms do not fall under the purview of Section 87 of the IT Act, under which these Rules are made as the section is only applicable to intermediaries. Section 69A is also limited to intermediaries and government agencies. It is alleged that since such publishers are not intermediaries, they do not fall under the purview of the IT Rules.

A similar petition was moved by LiveLaw, a legal news reporting website before the Kerala High Court, alleging that the Rules violated Articles 13, 14, 19(1)(a), 19(1)(g), and 21 of the Constitution and the IT Act.[4] The petitioners contended that the Rules had brought Digital News Media under the purview of the Press Council of India Act and the Cable Television Networks (Regulation) Act, 1995, without amending either of the two legislations. They also alleged that the rules were undoing the procedural safeguards formed by the Supreme Court in the Shreya Singhal[5] case. In this regard, the Kerala High Court has ordered that no coercive action is to be taken against the petitioner as interim relief.

Recently, the Bombay High Court in Agij Promotion of Nineteenonea v. Union of India[6] delivered an interim order staying Rules 9(1) and 9(3), which provides for publishers’ compliance with the Code of Ethics, and the three tier self-regulation system respectively. The Court found Rule 9(1) prima facie an intrusion of Art. 19(1)(a).

Legality & Enforceability of the Digital Media Ethics Code

Even though six months have passed since the Rules came into force, the legality and enforceability of the Rules are still in question. While most intermediaries, including social media and significant social media intermediaries, have at least partly complied with the Rules, the same cannot be said for publishers of news and current affairs content and online curated content. This will have to wait until the challenges to its legality and constitutionality are settled by Courts.

References:

[1] 2018 SCC OnLine SC 3419.

[2] 2018 (76) PTC 508 (Del).

[3] ILR 2017 KARNATAKA 735.

[4] https://www.livelaw.in/top-stories/kerala-high-court-new-it-rules-orders-no-coercive-action-issues-notice-on-livelaws-plea-170983

[5] (2013) 12 SCC 73.

[6] Agij Promotion of Nineteenonea v. Union of India, WRIT PETITION (L.) NO.14172 of 2021.

Image Credits: 

Photo by Jeremy Bezanger on Unsplash

 

Even though six months have passed since the Rules came into force, the legality and enforceability of the Rules are still in question. While most intermediaries, including social media and significant social media intermediaries, have at least partly complied with the Rules, the same cannot be said for publishers of news and current affairs content and online curated content. This will have to wait until the challenges to its legality and constitutionality are settled by Courts.

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Small Entity Status- Can Foreign Companies Claim It?

The government of India has been aggressively pushing for the development and promotion of entrepreneurship in the country. In the Intellectual Property Domain, various concessions have been made for small and upcoming entities. Organizations claiming a ”small entity” status or a “start-up” status while applying for registration are entitled to some additional benefits pertaining to fees and filing requirements.  Here, we briefly look upon the small entity status as per the Indian patent and design rules. 

Intellectual Property Related Government Initiatives to Encourage Small Entities & Startups

In 2020, the Scheme for Facilitating Start-ups Intellectual Property Protection, was launched as an experimental initiative to encourage start-ups to develop and protect their intellectual property, which was extended for a period of three years (April 1, 2020 – March 31, 2023).

Further, the Patent (Amendment) Rules, 2020[1] were notified on October 19, 2020 to simplify the procedure of submitting priority applications and their translations and filing of working statements under form 27. These changes were introduced in consequence to the Delhi High Court’s order in the case of Shamnd Bashir v UOI[2], that resulted in a stakeholder’s consultation.

On November 4, 2020 the Ministry of commerce and Industry[3], notified Patents (2nd Amendment) Rules, 2020[4], making additional filing and prosecution concessions for start-ups and small entities.  The status of start-ups was discussed critically, extending their life for up to ten years. These amendments are set to make protection of intellectual property affordable to every category and class of business. Finally, the government also notified Design Amendment Rules 2021,[5] which recognized start-ups as applicants. The current Locarno classification system[6] and simplified fee structure were introduced specifically to benefit small entities.

 

Categorization of ‘Entities’

 

1.1 Natural Person

Under the Indian Patent Act, natural person includes an individual human being. In this context, the patent application can be filed in the name of one or a group of individuals. Here, the inventorship and ownership lies solely with the inventor and he is entitled to:

  1. Sell
  2. Transfer
  3. License, or
  4. Commercialize their patent as per their want.

1.2 Small Entity

The Indian Patents Rule, 2003 under Rule 2(fa)[7] define ‘small entity’ as:

  • in case of an enterprise engaged in the manufacture or production of goods, an enterprise where the investment in plant and machinery does not exceed the limit specified for a medium enterprise under clause (a) of sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006); and
  • in case of an enterprise engaged in providing or rendering of services, an enterprise where the investment in equipment is not more than the limit specified for medium enterprises under clause (b) of sub-section (1) of Section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).

In calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other things as may be specified by notification under the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), shall be excluded.

1.3 Start up:

A start-up is an entity recognized as a ‘startup’ by the competent authority under the Startup India initiative and fulfills all the criteria for the same.

A foreign entity shall fall under the category of start-up if it fulfills the criteria of turnover and specified period of incorporation/registration, and submission of a valid declaration to that effect as per the provisions of Start-up India initiative. (In calculating the turnover, reference rates of foreign currency of Reserve Bank of India shall prevail.)

As per the Notification of Department of Promotion of Industry and Internal Trade[8], an entity is considered a start-up  

  1. Up to a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
  1. Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees.
  2. Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.

How to apply for Small Entity Status in India:

 

Any business can apply for the status of small entity under the MSME Development Act, 2006 at udyamregistration.gov.in. Subsequent to a successful registration the business shall be issued a Udyam registration certificate, that can be furnished as proof for availing various government subsidies and benefits. 

A foreign company can also register as an MSME on the same government portal. However, as a preceding step such a company shall register itself as per the provisions of the Companies Act, 2013[9].

Any Indian entity wishing to declare themselves as small entity for the purpose of Patent registration has to furnish the following documents:

  1. Form 28 of the Indian Patent Act:
  2. Proof of Registration Under MSME Act 2006 (Micro, small and medium enterprise development Act, 2006).
  3. Form 1 of the Indian Patent Act (if Fresh Patent Application is being filed).

Any Indian entity wishing to declare themselves as small entity for the purpose of Design registration:

  1. For an Indian entity to claim the status of small entity, it must be registered under the MSME Development Act, 2006.
  2. To file an application as a start-up, the entity should be recognized as startup by a competent authority under the Union government’s Start-up India Initiative.

 

Can a Foreign Company claim Small Entity Status in India?

On a plain interpretation of the requirements under the Patent rules and Design rules, it is clear that a foreign enterprise can claim the status of a small entity or a start-up, provided it is registered and incorporated in India and is engaged in the manufacture of goods and services as specified in the first schedule of the 2006 Act.[10]

Under the MSME Development Act, 2006 an enterprise is defined as:

enterprise” means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (55 of 1951) or engaged in providing or rendering of any service or services;[11]

With an objective to incentivize the incorporation of OPC (One Person Companies), the Ministry of Corporate Affairs amended the Companies (Incorporation) Rules. The move empowers OPCs to grow without any restrictions on paid up capital and turnover, thereby facilitating their conversion into any other type of company at any time. Additionally, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allowing Non-Resident Indians (NRIs) to incorporate OPCs in India has paved the way for foreign entities to enter Indian markets[12] [13].

 

Application Process for Small Entity Status in India? (Foreign Company):

Patent Rules

A foreign applicant seeking the status of ‘small entity’ for the purpose of filing patent in India, has to submit duly filled Form 28[14], along with the requisite documents of proof.

As per the requirements of Form 28, a foreign applicant has to attach evidentiary documents that verify their status as ‘small entity’ for the want of Rule 2 (fa) of the Patent Rules, 2003. For this purpose, the said documents can include a certified copy of financial statement from a Chartered Accountant, that proves that the investment in plant and machinery and the annual turnover of the entity on the date of filing the application does not exceed the limitations specifications under the MSME Development Act, 2006.

Design Rules

For the purpose of recognitions as a start-up the foreign entity should satisfy the following criteria:

  1. The entity must be a private limited company, limited liability partnership, or partnership firm.
  2. Its turnover at any point during the course of its business (from inception) should not exceed INR 100 crores (approximately USD 13.7 million as on date)
  3. The entity would be considered a start-up only for a period of 10 years from the date of incorporation.
  4. An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Start-up”

For a foreign entity to claim the benefit of being a start-up, an affidavit (which under Indian practices would need to be notarized, although this has not been explicitly mentioned in the Amendment Rules) along with supporting documents must be submitted at the time of filing the application[15], to be submitted with Form 24[16] of the Designs Rules.

References:

[1] https://pib.gov.in/Pressreleaseshare.aspx?PRID=1668081

[2] writ petition No. WPC- 5590

https://www.scconline.com/blog/post/2020/10/28/patents-amendment-rules-2020-patentee-would-get-flexibility-to-file-a-single-form-27-in-respect-of-a-single-or-multiple-related-patents/

[3] https://ipindia.gov.in/writereaddata/Portal/Images/pdf/Patents__2nd_Amendment__Rules__2020.pdf

[4] https://ipindia.gov.in/writereaddata/Portal/Images/pdf/Patents__2nd_Amendment__Rules__2020.pdf

[5] https://www.foxmandal.in/wp-content/uploads/2021/08/Indian-Designs-Amendment-Rules-2021.pdf

[6] https://www.wipo.int/classifications/locarno/locpub/en/fr/

[7] https://ipindia.gov.in/writereaddata/Portal/IPORule/1_70_1_The_Patents_Rules_2003_-_Updated_till_1st_Dec_2017-_with_all_Forms.pdf

[8] https://dpncindia.com/blog/wp-content/uploads/2019/02/DIPP-Notification-dated-19-Feb-2019.pdf

[9] https://www.indiacode.nic.in/show-data?actid=AC_CEN_22_29_00008_201318_1517807327856&sectionId=185&sectionno=2&orderno=2

[10] https://www.startupindia.gov.in/content/sih/en/bloglist/blogs/How-a-foreign-national-from-China-can-start-and-register-company-in-India.html

[11] https://www.indiacode.nic.in/show-data?actid=AC_CEN_46_77_00002_200627_1517807324919&sectionId=9884&sectionno=2&orderno=2

[12] http://164.100.117.97/WriteReadData/userfiles/Notification%201.pdf

[13] http://164.100.117.97/WriteReadData/userfiles/Notification%202.pdf

[14] https://ipindia.gov.in/writereaddata/Portal/IPOFormUpload/1_40_1/form-28.pdf

[15] https://www.foxmandal.in/wp-content/uploads/2021/08/Indian-Designs-Amendment-Rules-2021.pdf

[16] https://www.ipindia.gov.in/writereaddata/Portal/IPOFormUpload/1_109_1/Form_24.pdf

Image Credits: Photo by Startup Stock Photos from Pexels

 

On a plain interpretation of the requirements under the Patent rules and Design rules, it is clear that a foreign enterprise can claim the status of a small entity or a start-up, provided it incorporates itself under the relevant schemes and statutes and is able to furnish documents for proof to the same effect

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Abbreviations as Trademarks

It is a common practice for organizations/businesses to use abbreviations in relation to their brands. From Indian Space Research Organisation (ISRO) to Mahashian Di Hatti (MDH), from Bavarian Motor Works (BMW) to Kentucky Fried Chicken (KFC) and from Louis Vuitton (LV) to Madras Rubber factory (MRF) and General Electrics (GE), all these brands changed their strategy by adapting abbreviations to connect with their consumers easily.

In this post, we will look into the aspects of registering abbreviations as trademarks under the Indian Trademark laws and attempt to list out the requisite considerations associated with adopting an abbreviation as a brand name.

NATURE OF ABBREVIATIONS – DESCRIPTIVENESS

As per the trademark law, for a word/term to qualify for registration as a trademark, it should not be a generic or a common term to trade or be recognized by customers as being descriptive of the kind/quality/character/intended purpose of specific goods/services. However, most abbreviations would be considered descriptive and non-distinctive as they are formed out of words that could be generic/common to trade. In such instances, it becomes difficult to claim exclusive rights when the trademark itself is incapable of being associated with a single source, like ‘VIT’ for Vitamins or ‘EV’ for Electric Vehicles. Under these conditions, how can an abbreviation qualify as a valid trademark? How does one seek registration/protection of an abbreviation as a trademark?

In the matter of S.B.L. Ltd. vs. Himalaya Drug Co[1], the Court emphasised on the test of overall similarity while deliberating upon the broad and essential features of both the marks and the effect on the consumers. The plaintiff’s liver tonic was labelled ‘Liv. 52’ and the defendant’s mark ‘LIV-T’ dealt with homeopathic and ayurvedic preparations. In both instances, the word ‘Liv’ was an abbreviation for liver. The Court held that abbreviation ‘Liv’ for Liver was generic or commonly used and falls under the domain of public juris. Hence the Court denied both the parties an exclusive proprietary right.

The Delhi High Court, in the decision of Bharat Biotech International Ltd. vs. Optival Health Solutions Pvt. Ltd. and Ors.[2], provided clarification in relation to the nature of acronyms that may make valid trademarks. In the instant case, the facts in issue pertained to the acronym TCV – the full form being Typhoid Conjugate Vaccine, that was being used by the plaintiff as ‘TYPBAR-TCV’ and the defendant as ‘ZYVAC-TCV’. The Court opined that the vaccine ‘Typhoid Conjugate Vaccine’, was common to the trade world over, especially in the medical community as ‘TCV’. Therefore, the mark ‘TCV’ being a generic abbreviation, as also being descriptive of the goods it related to, was incapable of trademark protection.

From the observations made by the Courts, it is clear that an abbreviation that is generic, common to trade or carries a descriptive meaning in itself cannot be registered or even enforced unless added to another distinctive and non-descriptive term like TYBAR-TCV/ Liv. 52. Here, the comparison is made on the basis of the perception of the trademark as a whole and not just the abbreviation.

NATURE OF ABBREVIATIONS – NON-DISTINCTIVE

Let us now look at the decisions where the Courts have found that the abbreviation by itself has trademark value and ought to be protected. In general practice, abbreviations, especially those formed of less than 3 letters, are usually not considered inherently distinctive, unless on certain occasions it is proven with substantial evidence that such a mark has acquired distinctiveness or a secondary meaning has come to be associated with it, by virtue of such extensive use. Some of the popular examples are GE, HP, LG etc.

This concept of acquired secondary significance has been a deciding factor in the Delhi High Court’s judgement in Larsen and Toubro Limited vs. Lachmi Narain Trades and others[3], which dealt with the abbreviation trademark ‘LNT’/‘LandT’. The Court studied the evidence produced by the plaintiff and observed that ‘LandT’ had acquired a secondary meaning exclusively associated with the plaintiff, owing to its continuous use over the course of nearly 50 years, whereas, the Respondents, being in business for some years, had started using the abbreviation ‘LNT’ only recently. It was held that the trademark ‘LandT’ was identified with the goods marketed by the plaintiff and as a result, its use could not become permissible for expressions like ‘Lachmi Narain Trades’.

Similarly, the Madras High Court in the decision of VIT University vs. Bagaria Education Trust and Ors.[4], also relied on the distinction and secondary significance acquired by the plaintiff in relation to the abbreviation ‘VIT’ and recognised the exclusive rights of the plaintiff to use ‘VIT’ as trademark.

CONCLUSION

An abbreviation may be granted protection if it is not common to trade practices, has distinctive focal element(s) attached to it, its full form does not carry any descriptive meaning, or it is proved with substantial evidence that the abbreviation has acquired distinctiveness or secondary significance by way of use. By observing the rulings of various Courts over the years, we are given a basic sense of the principles that are relied on, while deciding whether an abbreviation deserves to be registered as a trademark or not, and some of them are as follows:

  • Acquired distinctiveness or secondary significance, by way of longstanding, extensive and exclusive use of the trademark: This is case-specific and is decided on the basis of the evidence produced.
  • Overall perception of the trademark: This is decided based on the anti-dissection principle and the ‘dominant feature’ rule. 
  • Common to trade or descriptiveness: The concept of publici juris is considered since no single business is allowed to claim monopoly or have exclusive rights over a generic term. The full form of the abbreviation is examined to check if it is directly pointing towards the goods/services bearing the trademark.

The problem with the protection of an abbreviation as a trademark is not the registration; rather it is the enforcement of the rights that creates more hassles. There are many industries (as seen above like pharmaceutical, electrical etc.), that follow the trend of adopting brand names that are derived from or consist of generic terms that are common to trade. In such cases, since one business cannot claim monopoly over a generic trademark, it is added to a distinctive element, which is precisely the reason why it is easier to protect an abbreviation as a part of a composite mark (in whole), as opposed to protecting and enforcing it by itself.

Image Credits: Photo by Alexey Mak on Unsplash

An abbreviation may be granted protection if it is not common to trade practices, has distinctive focal element(s) attached to it, its full form does not carry any descriptive meaning, or it is proved with substantial evidence that the abbreviation has acquired distinctiveness or secondary significance by way of use.

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Influencer Advertising in Digital Media Comes Under the Purview of ASCI’s Self- Regulation

The Advertising Standard Council of India (ASCI) has released Guidelines for Influencer Advertising in
Digital Media (“ Guidelines ”) which are applicable to posts published from June 14, 2021, onwards. A
draft version of these guidelines was initially circulated on 22 February 2021, for consideration and
comments from relevant stakeholders (advertisers, agencies, influencers, consumers). Post revision,
the final guidelines were released on June 1, 2021.

With the growing influence of digital media, ASCI believed that it was crucial for consumers to have the requisite information when something was being promoted with an intention to influence their opinion or behaviour for an immediate or eventual commercial gain.

Key Highlights of the Guidelines:

Who is an Influencer?

The guidelines define “Influencers” as “…someone who has access to an audience and the power to affect their audiences’ purchasing decisions or opinions about a product, service, brand or experience, because of the influencer’s authority, knowledge, position, or relationship with their audience”.

The Guidelines also recognize the growing trend of virtual influencing, thereby including fictional computer-generated people or avatars as virtual influencers within its scope.

What disclosures have to be made?

The guidelines mandate that all advertised/sponsored posts published by or on behalf of social media influencers through their accounts must carry a disclosure label that clearly identifies them as advertisements.

The content, format and placement of the disclosure:
Influencers or their representatives must clearly label their advertisement posts (from a list of approved labels, namely; Advertisement, Ad, Sponsored, Collaboration, Partnership, Employee or Free gift) in English or in the language of the advertisement.

Additionally, virtual influencers must disclose that they are not interacting with real human beings. The responsibility of disclosure of material connection also lies upon the advertiser.

The disclosures must be upfront, that is, a user should not have to click ‘see more’ while reading the post caption. Further, blanket disclosures, for instance availing the ‘link in bio’ option, shall be considered inadequate.

Placement in case the Ad is merely a picture or a video post:

In cases where the advertisement is not accompanied by text, for instance – an Instagram story, then the disclosure label must be superimposed over the picture or the video. In addition: 

  • If a video is 15 seconds or lesser, the disclosure label must stay for a minimum of 3 seconds;
  • If the duration is 15 seconds to 2 minutes, the label should stay for 1/3 rd of the length of video; and
  • For videos longer than 2 minutes, the label must stay for the entire section of the video that mentions the promoted brand or its benefits/features etc.

When is the disclosure required?

As per the Guidelines, disclosure is required if there is a material connection between the advertiser and the influencer. The material connection may be monetary or in any other form such as discounted products, perks etc.

As long as there is a material connection between advertisers and influencers, disclosure would be necessary even if the influencers are unbiased or the evaluations are formulated by the influencers.

Whose responsibility is it to ensure the disclosure?

Both Influencers as well as advertiser whose product or service is promoted through the advertisement bear the responsibility of proper disclosure of material connection and the content of the advertisement.

For clarity, where Advertiser has a material connection with the Influencer, Advertiser’s responsibility will be to ensure that the posted Influencer advertisement is in line with the ASCI code and its Guidelines.

While the Influencer shall be responsible for making disclosures required under the Guidelines. Further, the newly formulated guidelines, put the onus on influencers to carry out Due Diligence to review and satisfy themselves of the claims in the advertisement. In other words, influencers must present their opinions on the sponsored content subject, based on their genuine experiences of usage.

What would be the consequence of non-compliance?

Owing to the self-regulatory nature of ASCI, the enforcement mechanism of the Guidelines for Influencer Advertising in Digital Media is marred with obscurity. The only available remedy against the violations of the directions formulated under the new guidelines is by filing a complaint under the Code of Self-Regulation of ASCI (ASCI Code), by the relevant consumer cohort, or on a Suo motto action by ASCI.

Once a complaint is registered, it is forwarded for review to the Consumer Complaints Council (CCC) which functions as its examining body. The CCC would consider the complaints raised as well as the response of the advertiser, even if the advertiser is not a member of ASCI, before giving its recommendations on whether the advertisement in question violates the provisions of the Code. If the complaint is upheld, then the advertisers would be directed to modify the advertisement or pull it out.

The ASCI being a self-regulatory body has no powers to penalize advertisers and may only have them modify or remove their advertisements should they not comply with their Code.

Image Credits: Photo by Oleg Magni from Pexels

The guidelines mandate that all advertised/sponsored posts published by or on behalf of social media influencers through their accounts must carry a disclosure label that clearly identifies them as advertisements.

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PhonePe Vs. BharatPe Case: No Exclusivity Over a Part of a Mark, Not Even by Misspelling It

Registration of the (whole) mark does not confer an exclusive right over a part of a registered mark. Similarly, no exclusivity can be claimed over a descriptive mark or a descriptive part of the mark, not even by misspelling it. This was the ruling of the Delhi High Court in a recent Trademark Infringement & Passing Off matter between PhonePe Pvt. Ltd. (Plaintiff) & Ezy Services & Anr. (Defendants). Hon’ble Justice C. Hari Shankar affirmed some of the fundamental principles of the Trademark Law, which have been asserted by various Courts from time to time.
PhonePe’s Perception:

PhonePe in its plea before the Delhi High Court stated that: a consumer of average intelligence and imperfect recollection, on seeing the defendants’ mark BharatPe would immediately associate it with PhonePe.

Well, how often is our intelligence questioned and challenged, even without our knowledge? Considering the deep inroads that technology has made into our lives now, I reckon all of us are reasonably aware of the prominent digital wallets in the market. Knowing that, it is contestable how many of us would have wondered about any association between these two marks purely based on the similarity in their suffix “Pe”.

Background:

The plaintiff had filed a suit before the Delhi High Court seeking a permanent injunction and other remedies against the defendants’ use of ‘Pe’ or any deceptive mark identical and/or similar to the plaintiff’s trademark ‘PhonePe’. The plaintiff alleged that the use of the word “BharatPe” itself, infringed the plaintiff’s registered trademark and amounted to passing off.

The plaintiff in its suit claimed that “Pe” is an essential, dominant, and distinguishing feature of the plaintiff’s registered trademarks. Plaintiff further claimed that “Pe” is an invented word, not to be found in the English dictionary and when combined with “Phone”, which is an ordinary dictionary word with a well-known meaning, “Pe” becomes the dominant and essential feature of the plaintiff’s trademark “PhonePe”.

Court’s Findings and Rulings:

The Hon’ble Delhi High Court’s decision in this matter seems to be premised based on following three principles, which have already been established earlier in multiple Judgments by various Courts:

a) The Anti-Dissection Rule:
The Hon’ble High Court observed that the registered mark ought not to be dissected for the purpose of comparison with the conflicting mark. However, the Court acknowledged the exception of “dominant mark” test, under which, if any part of the plaintiff’s mark was found to be dominant, the Court was required to examine whether such dominant part of the plaintiff’s mark was infringed by the defendant’s mark.

The plaintiff contended that “PhonePe” was a combination of the words “Phone” and “Pe”, where “Phone” was a common dictionary word and the suffix “Pe” was not a dictionary word, which made it the dominant feature of the plaintiff’s trademark. Similarly, in the defendant’s trademark, the word “Bharat” was publici juris and “Pe” formed the dominant element of the mark “BharatPe”. However, the Court was not convinced on the argument and did not find “Pe” to be the dominant part, therefore, the marks were not allowed to be dissected for the comparison.

The Court ruled that while applying the above principles to the facts in hand, the following positions emerged i.e. (i) “PhonePe” and “BharatPe” were both composite marks. (ii) the marks could not be dissected into “Phone” and “Pe” in the case of the plaintiff and “Bharat” and “Pe” in the case of the defendants; and (iii) the plaintiff could not claim exclusivity over the word “Pe”, as it was merely a misspelling of the word “Pay”, hence no infringement could be claimed on the basis of part of a registered trademark.

b) Separate Registration of a Part of a Composite Mark:
The Hon’ble Court further observed that since the plaintiff did not have any registration over the suffix “Pe”, therefore, it could not claim any exclusivity on the same. As a result, the question of infringement did not arise because of the alleged similarity between the non-essential, unregistered part of the composite mark.

In the cases of South India Beverages1 and P.K. Overseas Pvt. Ltd.2, the Delhi High Court explained the relation between the anti-dissection principle and the “dominant/essential feature” principle. The division bench relied on a passage from McCarthy on Trademarks and Unfair Competition, earlier cited in the case of Stiefel Laboratories3, which stated that “The rationale for the rule is that the commercial impression of a composite trademark on an ordinary prospective buyer is created by the mark as a whole, not by its component parts. However, it is not a violation of the anti-dissection rule to view the component parts of conflicting composite marks as a preliminary step on the way to an ultimate determination of probable customer reaction to the conflicting composites as a whole”.

c) Non-exclusivity of Descriptive or Generic Marks or Parts of Marks:
The Hon’ble Court observed that a party cannot claim exclusivity over a descriptive or generic mark or a part of the mark that is considered descriptive. The Court went on to observe that the plaintiff could not claim that the mark was non-descriptive merely by misspelling the descriptive word. However, the Court admitted an exception to this principle in situations where the descriptive or generic mark had acquired distinctiveness or secondary meaning.

The Court further observed that had the plaintiff been able to establish that the word “Pe” had acquired distinctiveness and secondary meaning, it might have been able to make out a case of infringement. However, in this case, the plaintiff’s use of the mark “PhonePe” was only since 2016 and even the defendants claimed to have extensive use of their mark “BharatPe”. Therefore, the plaintiff had not been able to make out a prima facie case.

In the case of Marico Limited4, the Court dived deep into the concept of acquired secondary meaning of a descriptive mark and held that while deciding whether a descriptive mark is registrable or not the “Courts should ordinarily lean against holding distinctiveness of a descriptive trademark unless the user of such trademark is over such a long period of time of many-many years that even a descriptive word mark is unmistakably and only relatable to one source i.e. the same has acquired a secondary meaning”.
1 South India Beverages v. General Mills Marketing, AIR 1965 SC 980
2 P.K. Overseas Pvt. Ltd. v. Bhagwati Lecto Vegetarians Exports Pvt. Ltd., 2016 SCC OnLine Del 5420
3 Stiefel Laborataries v. Ajanta Pharma Ltd, 211 (2014) DLT 296
4 Marico Limited v. Agro Tech Foods Limited, 2010 (44) PTC 736 (Del.) (DB)
The Marico case also discussed the nature and character of a misspelt word when used as a trademark and held that “if partly tweaked descriptive words and expressions of English language are claimed to be coined words, the same would result in a grave and absurd situation because a non-tweaked word being a completely descriptive word will in fact be deceptively similar to the tweaked descriptive English language word or expression of which registration is obtained”.

Conclusion:

The Hon’ble Court ruled that there was no case for grant of interim injunction against the defendants. The Court observed that except the common word “Pe” (suffix) it cannot be established that the marks “PhonePe” and “BharatPe” are confusingly or deceptively similar. Barring the suffix “Pe” these are two different words altogether with no commonality whatsoever.

The important legal positions that emerge from this decision are:
(i) In accordance with the “anti-dissection” rule, it was held that the composite marks were to be considered in their entirety rather than truncating or dissecting them into individual components/elements.
(ii) The registration of a composite mark cannot confer any exclusive rights over any part of such registered mark unless otherwise, such part is the dominant part of the registered mark.
(iii) No exclusivity can be claimed, over a descriptive mark, or a descriptive part of a mark, not even by misspelling it, unless otherwise the descriptive mark or descriptive part has attained distinctiveness, or it has acquired a secondary meaning.

This case has surely reaffirmed some of the basic principles of trademark laws that prohibit adaptation and exclusive claim over descriptive and generic marks or part of the mark.
Read about the important legal positions that emerge from the PhonePe V. BharatPe decision in this article.

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BigBasket Vs. Daily Basket Saga

Perils of using generic/descriptive terms as a “Trademark”

On February 21, 2021, when Ramesh Vel, the founder of a Coimbatore based startup “Daily Basket” tweeted about BigBasket’s alleged bullying through a cease & desist notice, no one ever thought that it would become such a big issue. Even before the news could spread, Daily Basket was prompt enough to create a page https://bbisabully.com/ to put forth their perspective and even posted a copy of the notice. They did not stop at this but went on to launch an online campaign #BoycottBigBasket.

This prompt and aggressive move surely garnered sympathies as well as support for Daily Basket and BigBasket was at the receiving end as it was perceived as a bully in the entire episode. Though it may not have caused any impact on BigBasket’s revenue, the Company cannot deny that the episode did put a dent in its brand reputation.

The Notice:

The cease & desist notice dated Feb 17, 2021, was sent to the startup Letsdaily India Private Limited, asking them to refrain from using the mark “Daily Basket” and any other name or a mark containing the term “Basket” and also sought Rupees Two Lakhs towards the cost of the legal notice.

Who owns/claims what?

Before analyzing the matter, let us understand the claims and ownerships over the subject marks.

Looking at the trademark database, BigBasket seems to have registered several variants of its brand “BigBasket” in various classes i.e. 29, 30, 31 & 35 (food & related goods and online marketplace). However, the record does not show or mention any use or registration of the term “Basket” by BigBasket independently.

Daily Basket claims to have started its business around August 2020 but there is no record of any trademark application/registration by them.

The term “Basket”:

Currently, there are two “Basket” marks that seem to have been registered in India; one being in Class 35 where the application is dated 2014 (appl. no. 2779571) and the other one in Class 31 where the application is dated 2017 (Appl. no. 3470365).

The mark “Daily Basket”:

With regard to the mark “Daily Basket”, currently there are 3 marks in the records of Trademark Registry in Class 35. The first “Daily Basket” mark (appl no. 1807585), which was filed way back in 2009, could not proceed to registration and the same stands abandoned.

The other “Daily Basket” mark (appl. no. 3042971), which stands “registered”, was filed in the year 2015. The third “Daily Basket” mark, which was filed in the year 2017, (app. no. 3491637) was refused registration due to various reasons including the presence of conflicting marks in the same class.

Interestingly, during the prosecution of the last two marks, the examiner did not cite “BigBasket” as a conflicting mark even though BigBasket’s trademarks were on record or registered during that period and in the same class – related to the same or similar services.

Other similar marks with prefix/suffix “Basket”:

There are over a dozen trademarks with suffix/prefix “basket” including, Oven Basket, Nature’s Basket, Ocean Basket, Fresh Basket, Health Basket etc. which appear to be in existence (registered or filed or used) on the Trademark Registry’s record as early as 1999 which is way prior to BigBasket’s coming into existence i.e., 2012.

Similarly, there are another over a dozen marks with prefix/suffix “basket” including Fbasket, EBasket, 4Basket, NutBasket, Medbasket, TekBasket, MilkBasket, Badi Basket, Aqua Basket, Pure Basket, Spin Basket, Eco Basket etc. which were registered post BigBasket’s trademark registration and most of them are in use and in relation to the goods/ services in Class 29, 30, 31 and 35.

BigBasket’s Claim – fair or unfair?

As per the cease & desist notice, BigBasket’s primary objection was over Daily Basket’s use of the term “Basket”. A simple comparison between the two marks (as shown in https://bbisabully.com/)makes it clear that there exists no similarity between the two logos. Therefore, the main issue in the subject matter was over the term “Basket”.

Without dwelling deep into the Trademark Law, which has already been done in many of the previously authored articles, it is abundantly clear that a term like “Basket” (in class 35) would be considered a descriptive mark hence non-registrable (we need not get into the nitty-gritty of how the other two “Basket” marks were registered).

Further, even though BigBasket has been threatening and opposing registration of various other marks with Prefix/Suffix “Basket”, the fact that it did not even attempt to register the mark “Basket” itself makes the strength of the contention fairly obvious.

What goes against BigBasket?

A plain reading of the cease & desist notice explains the seriousness of the matter. It is beyond anyone’s understanding how and on what ground one would claim exclusive ownership over the term “Basket” especially when a) you don’t have any registration over it; b) there are several already registered marks (similar) some of them being prior to even their commencement of business, and c) the mark being a descriptive one.

Perhaps, no one can deny the fact that BigBasket’s claims were far-fetched and demands overly ambitious. It is quite possible that they would not have been apprised with the basic principles of trademark law or rather the whole approach was very casual in nature.

It happens in many cases where the trademarks applications are opposed and users are threatened with legal notices even when there is no strong case. This is because, in India, it is not a common practice to fight back or take legal action for groundless threats.

What are the lessons learnt?

Getting involved in personal capacity must be avoided when a matter can be and should be handled by experts who know the ins and outs of the legal implications. In the instant case, the founder of Daily Basket got involved personally and used digital and social media to level allegations. The fact that BigBasket chose to respond in a clarification mode also did not go down well and the whole matter got murkier.

Had this been handled by their lawyers instead (considering the substance in the notice), it would have simply been concluded without any clamour and commotion. Involvement of founders or CEOs is advisable and welcome only in closed-door negotiations or dispute resolutions but definitely not in public forums.

Is it wise to adopt a generic mark?

Adoption and registration of generic and descriptive marks always have consequences, both in the short term as well as the long term. In the short term, it is an uphill task to get these marks registered, whereas in the long term one must keep contesting the use/registration of similar marks by third parties.

There is always a fraction of people who would advise you to adopt a generic/descriptive mark which makes the marketing team’s job much easier, but everyone does not get lucky and neither does everyone has deep pockets. The “Bookings.com” case is a good example where the matter went till US Supreme Court before the mark was registered and even then, they did not get the right to refrain others from using similar marks.

Similarly, in the recent Judgment of PhonePe Vs. BharatPe, the Hon’ble Delhi High Court asserted that no exclusivity can be claimed over a descriptive mark, or a descriptive part of the mark unless the descriptive mark or descriptive part has attained distinctiveness, i.e. it has acquired a secondary meaning.

The content of this Article does not necessarily reflect the views / position of Fox Mandal but remain solely those of the authors.

 

 

Know all about the validity of the claims made by both BigBasket and Dailybasket from a trademark registration perspective.

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Income Tax Returns for AY 2020-21: Ready Referencer

With the extended time limit for filing of Income Tax Return (for AY 2020-21), u/s. 139(1), without late fees, for Non-Audit cases and for Non-Corporate assessees of 31st December 2020 fast approaching, given below is a quick guide for ready reference of some key changes that have been made in the respective Income tax return forms for this year.

Further, the conditions and features for eligibility of forms that are applicable for filing the correct income tax returns are also specified as follows:

Key Procedural Changes:

  • ITR 1 to ITR 4 can be filed using PAN or Aadhar by Individuals.
  • The submitted ITR forms display the ITR-V with a watermark ‘Not Verified’ until the same is verified either electronically by EVC or by sending the same via post after manual signing.
  • The unverified form ITR-V will not contain any income, deduction and tax details. The unverified form will only contain basic information, E-filing Acknowledgement Number and Verification part.
  • The unverified acknowledgement is titled as ‘INDIAN INCOME TAX RETURN VERIFICATION FORM’ & final ITR-V is titled as ‘INDIAN INCOME TAX RETURN ACKNOWLEDGEMENT’.
  • Return filed in response to notice u/s. 139(9), 142(1), 148, 153A, and 153C must have DIN.
  • There is a separate disclosure for Bank accounts in case of Non-Residents who are claiming income tax refund and not having a bank account in India.

COVID related Changes:

  • The Government had extended the time limit for claiming tax deduction u/CH VIA to 31st July 2020, and the details of the same need to be reported in Schedule DI (details of Investment).
  • The time limit for investing the proceeds or capital gains in other eligible assets, so as to claim exemptions u/s 54/ 54B/ 54F/ 54EC, had been extended to 30th September 2020.
  • Penal interest u/s. 234A @ 1% p.m., where the payments were due between 20-03-20 to 29-06-20 and such amounts were paid on or before 30-06-20, had been reduced to 75%, vide ordinance dated 31-03-20.
  • Period of forceful stay in India, beginning from quarantine date or 22-03-20 in any other case up to 31-03-20, is to be excluded, for the purpose of determining residential status in India.[1]

Consequences of Late filing of Return of Income:

  • Late Fees u/s. 234F of INR. 5,000 up to 31.12.20 and INR. 10,000 up to 31.03.21. In case of total income up to 5 Lacs, the penalty is INR. 1,000.
  • Penal Interest u/s. 234A @ 1% per month
  • Reduced to 75%. vide Ordinance dated 31.03.20, where the payments were due between 20.03.20 to 29.06.20, and such amounts were paid on or before 30.06.20.
  • Vide CBDT Notification dt 24.06.2020, no interest u/s 234A if Self-Assessment tax liability is less than 1 Lac and the same has been paid before the original due date.
  • In case of a belated return, loss under any head of Income (except unabsorbed depreciation) cannot be carried forwarded.
  • Deduction claims u/s. 10A, 10B, 80-IA, 80-IB, etc would not be allowed.

Consequences of Late filing of Return of Income:

  • Late Fees u/s. 234F of INR. 5,000 up to 31.12.20 and INR. 10,000 up to 31.03.21. In case of total income up to 5 Lacs, the penalty is INR. 1,000.
  • Penal Interest u/s. 234A @ 1% per month
  • Reduced to 75%. vide Ordinance dated 31.03.20, where the payments were due between 20.03.20 to 29.06.20, and such amounts were paid on or before 30.06.20.
  • Vide CBDT Notification dt 24.06.2020, no interest u/s 234A if Self-Assessment tax liability is less than 1 Lac and the same has been paid before the original due date.
  • In case of a belated return, loss under any head of Income (except unabsorbed depreciation) cannot be carried forwarded.
  • Deduction claims u/s. 10A, 10B, 80-IA, 80-IB, etc would not be allowed.

Vide CBDT Notification dt 24.06.2020, no interest u/s 234A if Self-Assessment tax liability is less than 1 Lac and the same has been paid before the original due date.

  1. Section 5A: Apportionment of income between spouses governed by the Portuguese Civil Code.
  2.  115BBDA: Tax on dividend from companies exceeding Rs. 10 Lakhs; 115BBE: Tax on unexplained credits, investment, money, etc. u/s. 68 or 69 or 69A or 69B or 69C or 69D.
  3. Inserted in sec 139(1) by Act No. 23 of 2019, w.e.f. 1-4-2020:

Provided also that a person referred to in clause (b), who is not required to furnish a return under this sub-section, and who during the previous year:

  • has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or
  • has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or
  • has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or
  • fulfils such other conditions as may be prescribed,

Shall furnish a return of his income on or before the due date in such form and verified in such manner and setting forth such other particulars, as may be prescribed.

4. Section 57: Deduction against income chargeable under the head “Income from other sources”.

5. Schedule DI: Investment eligible for deduction against income (Ch VIA deductions) to be bifurcated between paid in F.Y.19-20 and during the period 01-04-20 to 31-07-20.

6.High-value Transaction: Annual Cash deposit exceeding Rs. 1 crore or Foreign travel expenditure exceeding Rs. 2 Lakhs, Annual electricity expenditure exceeding Rs. 1 Lakh.
7.Schedule 112A: From the sale of equity share in a company or unit of equity- oriented fund or unit of a business trust on which STT is paid under Section 112A.

8. 115AD(1)(iii) proviso: for Non-Residents – from the sale of equity share in a company or unit of equity-oriented fund or unit of a business trust on which STT is paid under Section 112A.
9. Section 40(ba): any payment of interest, salary, bonus, commission or remuneration paid to a member in case of Association of Person (AOP) or Body of Individual (BOI).

10. Section 90 & 90A: Foreign tax credit in cases where there is a bilateral agreement; Section 91: Foreign tax credit in cases of no agreement between the countries.

[1] Circular No 11 of 2020 dated 08th May 2020.

References

Image Credits: Photo by Markus Winkler from Pexels

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Contrasting Orders on Statutory Licensing for Broadcasting of Sound Recordings and Underlying Works

The Hon’ble Intellectual Property Appellate Board (“IPAB”), on the 31st of December, 2020, passed a landmark ruling (“IPAB Order”) in a proceeding under section 31D of the Copyright Act, 1957 (“Act”) wherein it fixed separate statutory royalty rates to be payable to owners of sound recordings and underlying works for the radio broadcast of musical works and sound recordings, and underlying works.

However, in less than a week since the IPAB order, the Hon’ble Delhi High Court acted in stark contrast to the above IPAB order, when it disposed-off two long-pending disputes of statutory licensing of sound recording and underlying work i.e., The Indian Performing Right Society Ltd (“IPRS”) vs. Entertainment Network (India) Ltd (“Radio Mirchi”) [CS(OS) 666/2006] AND Phonographic Performance Ltd (“PPL”) & IPRS vs. Cri Events (P) Ltd & Ors [CS(OS) 1996/2009].

The said order ruled that the Act recognizes separate copyright in a sound recording besides the copyright in the literary (lyrics) and musical works (“music notes”) (collectively referred to as the “underlying works”), and when sound recordings are broadcasted, the underlying works are not considered to be utilized independent of the sound recording, therefore, a separate license for communicating the underlying works is not required.

Brief Facts of the Case

IPRS vs Radio Mirchi

Radio Mirchi acquired a license from IPRS to broadcast sound recordings in seven cities, however, apart from the seven cities for which Defendant had acquired a license, it also started broadcasting in three new cities. It was the case of the IPRS that Radio Mirchi infringed the public performance rights of IPRS by broadcasting in three new cities without obtaining a license to do so.

IPRS & PPL vs Cri Events

This was a rather straightforward case, where IPRS and PPL jointly sued Cri Events, an event management company for playing music without obtaining a license from the Plaintiffs.

The contention of the Plaintiff(s)

The primary contention of the IPRS was that it is a registered society for authors, composers, and publishers of Indian literary and musical works, whereas, PPL is a registered society for music companies. Since, both the societies are registered for different categories, and exploitation of the sound recordings also implies exploitation of literary and/or musical works forming part thereof, license for both the work i.e., sound recording as well as the underlying work needs to be acquired.

The Plaintiff also contended that copyright in the underlying work runs parallel to the copyright in a sound recording and hence the exploitation of such sound recording would necessarily invoke the right in the underlying works as well.

Plaintiff also contended that the 2012 Amendment to the Act which granted the right of continuous royalties to the author of underlying works irrespective of the assignment of the sound recording, is retrospective in nature.

Observation of the Court

Underlying works are part and parcel of Sound Recording – Not exploited separately

With respect to the claim that the copyright subsists in the underlying work independent of the sound recording, the Hon’ble Court ruled that the sound recording is not merely a sub-total of lyrics and musical notes alone, and it includes a voice, lyrics, musical notes, arrangement of all three elements in a certain way to sound appealing to the human ear, making the Sound Recording in an entirely new set of works that incorporates many works, including lyrics and musical notes. The Court further held that even the statute under Section 2(z) of the Act recognizes sound recording as the work of joint authorship of multiple authors and the Act recognizes separate copyright in a sound recording besides the copyright in the underlying works.

2012 Amendment to the Copyright Act is merely clarificatory in nature – Section 19 (10) does not change the interpretation and application of the law

The provision of law as existed before the amendment was that once the authors of the underlying work consented to the incorporation of their works in the sound recording and agree to vest separate copyright in a sound recording, no infringement of the underlying work can be claimed for communication of the sound recording to the public. In the view of the Court, this provision remained unchanged even after the amendment of 2012 since the transfer of ownership and economical rights were the very basis of assignment.

At this point, it is necessary to refer to section 19 (10) of the Act which provides that assignment of copyright in any work to make a sound recording that does not form part of any cinematograph film shall not affect the right of the author of the work to claim an equal share of royalties and consideration payable for any utilization of such work in any form.

The Court while interpreting “any form” as any form other than sound recording ruled that the provision does not mean that utilization of the work as embodied in the sound recording also entitles the owner of the copyright in underlying work to demand an equal share of royalties and consideration payable for the sound recording. The Court opined that to interpret the provision otherwise would make other provisions of the Act redundant which authorizes the owner of sound recordings to communicate it with the public without any license and/or permission from the authors of underlying marks. Hence, section 19 (10) of the Act to be read as to mean right to receive royalties for the exploitation of underlying work in any form other than sound recording.

What came to the aid of the Court’s interpretation was that Section 19 (10) of the Act only covers sound recording not being part of a cinematographic film, whereas, the Plaintiff has explicitly submitted that the sound recordings form a major part of the Indian film industry. However, the reasoning doesn’t hold good since similar provision has been added under Section 19 (9) of the Act in relation to cinematographic films.

This interpretation, effectively meant that, in the case of a live performance of songs incorporating the literary and musical works of members of IPRS, even if such songs also have a sound recording, for such live performance, a licence from IPRS will be necessary. Hence, in the case of CS (OS) 1996/2006, Defendant’s act of communicating the underlying work through live performance in the event amounted to infringement of the Plaintiff’s copyright.

Final Order: Right to Receive Royalties made Redundant?

In light of the above reasoning, the Court dismissed the first case in favour of the Defendant and the second case in favour of the Plaintiff by holding that:

  • In case the sound recordings are to be communicated to the public, i.e., play them, or broadcast them, a license from PPL is essential;
  • In case the underlying works are to be communicated to or performed in the public, independently, through an artist, the license of IPRS is essential; and
  • in case there is an event involving performances or communication of works of both kinds to the public, the license or authorization of both, PPL and IPRS is essential;

The Delhi High Court’s Interpretation of Section 19 (10) defeats the purpose of the Amendment

The Hon’ble High Court Order neglect the very basis for which the 2012 Amendments were introduced, which is evident from the ‘Statement of objects and reasons’ appended to the Copyright Act (Amendment) Bill 2010 to be read as:

  1. Clarify that the authors would have rights to receive royalties and the benefits enjoyed through the copyright societies;
  2. Ensure that the authors of the works, in particular, author of the songs included in the cinematograph films or sound recordings, receive royalty for the commercial exploitation of such works; and
  3. introduce a system of statutory licensing to broadcasting organisations to access to literary and musical works and sound recordings without subjecting the owners of copyright works to any disadvantages.

Hence it is within the legislative intent to treat the underlying works and the sound recording independent from one another, and interpreting otherwise will only defeat the purpose of the Amendment.

The Delhi High Court’s Interpretation of Section 19 (10) makes Section 31D Redundant

The provisions of Section 13(4) read with Section 14(a)(iii), 4th proviso to Section 18, Section 19(10) of the Act along with Section 31D clearly mandate the author’s right to receive royalties for the exploitation of underlying work by third parties, irrespective of any assignment. The reading of section 31D (2) of the Act is clear, i.e., The broadcasting organisation… shall pay to the owner of rights in “each work” royalties in the manner and at the rate fixed by the Appellate Board. Even on a plain reading of the heading of Section 31D and the provision of Section 31D (2), we can understand that the sound recording, and the underlying works are treated separately for the purpose of statutory licensing. Hence, again, it is the interpretation of the Hon’ble Delhi High Court, which makes the 2012 Amendment, redundant.

Appropriate to say single License to exploit but separate Royalties payable.

The IPAB in its analysis of Section 19 (10) of the Act held that the amendment resulted in the bifurcation of the underlying works embodied in the sound recording into independent and distinct rights, allowing in rights in sound recording and rights of the authors of the underlying works to operate independently in their own field as per the operation of amended provisions. It follows that while only the Producer can exploit the distinct rights existing in the sound recording, the authors can exploit the underlying work as a shared right.

Conclusion: The Puzzle Ahead

The contrasting orders of the Hon’ble Delhi High Court and the IPAB in less than 5 days have unevenly painted the author’s statutory right to receive royalties under section 31 D of the Act. Going forward, the orders will only cause hurdles for Music Companies, Authors, Artists, Copyright Societies, and any other interested parties to such music agreements.

It was ruled in M/s. Shreedhar Milk Foods Pvt. Ltd. vs. Mr. Vikas Tyagi and The Registrar of Trade Marks, 2013 (55) PTC 247 (IPAB) that the IPAB’s powers in relation to its original and appellate jurisdiction are parallel to that of High Court as enshrined by Article 227 of the Constitution of India, 1950. Hence, in principle, neither of the order can prevail over the other, and since the orders are passed by a Single Judge Bench, we await to see if the interpretation of either the order is challenged before a larger bench of the Hon’ble Delhi High Court or even before the Supreme Court in the coming days.

Apart from this, another viable solution shall be a further amendment to the language of Section 19 (10) of the Act either ratifying the interpretation of the Hon’ble Delhi High Court, or confirming its initial intent that the author’s right to receive royalties for the exploitation of underlying works, in any form, including “sound recording” remains unaffected by any assignments.

The contrasting orders of the Hon’ble Delhi High Court and the IPAB in less than 5 days have unevenly painted the author’s statutory right to receive royalties under section 31 D of the Act. Going forward, the orders will only cause hurdles for Music Companies, Authors, Artists, Copyright Societies, and any other interested parties to such music agreements.

Image Credits: Photo by freestocks on Unsplash

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A Look Back at the Developments in Copyright Laws In the year 2020

While the world grappled with the Covid-19 pandemic and its effect, the Indian judicial setup kept steady with courts functioning virtually and providing relief in urgent matters, although a few matters were adjourned and filing dates were postponed. This year, therefore, continued to witness fascinating cases in the field of Intellectual Property, especially with respect to Copyright and disputes related to cinematographic films released on OTT platforms. We bring to you the key Copyright related updates in India for one of the most overwhelming year of the decade.

1. Legislative Developments

Notification by the Copyright Office Seeking Inputs: Amendments to Copyright Act, 1957

The National Association of Software and Service Companies (NASSCOM) had issued a notification informing the industry stakeholders that the Copyright Office was seeking comments on any suitable amendment that needed to be carried out to the Copyright Act, 1957, keeping in view the technological advancement and increased use of internet and digitalization.

IPAB’s Notice on Fixing Royalty for Radio Statutory License

The IPAB, on an application made by Music Broadcast Ltd. and other “radio” broadcasters, had issued a notice communicating its intention to fix royalties for the broadcasting of copyrighted content through radio and had sought suggestions from owners of Copyrights, any broadcasting organization, radio broadcaster or any other interested persons regarding the same.

NDLI Published a Draft of India’s First Copyright Guide for Indian Libraries.

The National Digital Library of India (NDLI), a project under the Ministry of Education that seeks to provide access to educational content available in digital libraries across the globe, issued a draft Copyright Guide for Indian Libraries. The guide has been prepared to ensure access to content by the end-user and protect the rights of the knowledge creators at the same time. The guide lists down the obligations of the librarians that would mitigate their chances of receiving alleged copyright infringement notices and ensure the smooth functioning of the libraries.

Public Notice issued by Copyright Office w.r.t. the lockdown

The Copyright Office also issued a public notice dated 16 March 2020, which stated that all copyright matters which were listed from 17 March 2020 to 31 March 2020 had been adjourned and the same were to be rescheduled at a later date.

2. Case Laws

A quick rewind on the prominent judgments of the year:

Sameer Wadekar & Anr. v. Netflix Entertainment Services Pvt. Ltd. (2020 SCC Online Bom 659)

The plaintiff sought an interim injunction against the release of the web-series “BETAAL” on the ground that he noticed at least 13 similarities between the web-series and the Plaintiff’s script titled “VETAAL”. The Bombay High Court refused to restrain Defendant from releasing the web series on the ground that there existed only similarities in the concept of the two works and not in the theme, plot and storyline. It was reiterated that copyright subsists only in the expression of an idea and not on the idea itself. The Court also noted the fact that while Plaintiff claimed his work was original, he failed to establish that the defendant had access to the Plaintiff’s work, which is paramount to determine claims of plagiarism.

Vinay Vats v. Fox Star Studios India Pvt. Ltd. & Anr.

The Plaintiff approached the Delhi High Court seeking an interim injunction against the release of the movie Lootcase which the Plaintiff claimed to be a copy of his script for the film Tukkaa Fitt. Much like in the case of BETAAL and VETAAL, the Court ruled that copyright does not subsist in the idea itself, but it is confined to the expression of the idea. The Court observed that the plot cannot be the exclusive ownership of the Plaintiff as it can be expressed in a number of ways. Moreover, since the Defendant’s work had considerable dissimilarities from the Plaintiff’s work, the Court refused to grant any relief to the Plaintiff.

Zee Entertainment Enterprises v. Ameya Vinod Khopkar & Ors.

The Plaintiff sought an ad-interim injunction against the release of the film “De Dhakka 2” on the ground that it had been assigned the negative rights in the original film “De Dhakka” by the original creator. The Bombay High Court refused to entertain the plea since the assignment deed pertained only to the original work and the right to adaptation and reproduction in the form of a sequel or prequel had not been assigned to the Plaintiff. The Court also observed that the script, screenplay, concept, were considerably different from the original work, making it an independent and separate work.

Jagran Prakashan Ltd. v. Telegram FZ LLC & Ors

The Plaintiff, a well-known Hindi language daily newspaper offering news content via print and digital circulation, sued Telegram, a Dubai based instant messaging app for the unauthorized circulation of the Plaintiff’s e-paper in PDF form by several unidentified users of the Defendants, thereby infringing upon the trademark and copyright subsisting in the said e-paper.

It was the case of the Plaintiff that several channels and usernames containing the term “Dainik Jagran” were created in the Defendant’s Platform and the users stared circulating pdf copies and e-article from the Plaintiff’s website. Plaintiff further contended that the Defendant, as an intermediary, failed to discharge its duties of due diligence, when it permitted reproduction, adoption, distribution, transmission and dissemination of Plaintiff’s content.

The Delhi High Court, agreeing with the Plaintiff’s submissions ruled that the Defendant had failed to exercise due diligence, which required the Defendant to block the unidentified users within 36 hours of being aware of such infringing acts of the users. Hence, the Court ordered an ad-interim injunction against the Defendant for causing severe financial loss to the Plaintiff and infringement of trademark and copyright held by the Plaintiff due to the illegal circulation of the content of the e-newspaper.

Super Cassettes Industries Private Limited and Ors. Vs. Nandi Chinni Kumar and Ors

Defendant No.1, a soccer player entered into an agreement with the Plaintiffs, a music label and film production company, allowing them to produce a biography on him, for valuable consideration. Following this, the Plaintiff registered the script of the movie along with the title “Slum Soccer” with the Telangana Cinema Writers Association. Soon after the registration of the script with the Writers Association, the Plaintiff came across the story “JHUND” which was the storyline of the Coach (Defendant 2) of Defendant 1.

To restrain the Defendants from proceeding with the production of the infringing movie “Jhund”, the plaintiff filed a suit of injunction on the ground that continuing with directing the film would constitute copyright infringement since he owned the concept, thought, characterization, image, identity and expression of the life story of Defendant 1.

After watching the teaser of the Defendant’s movie “Jhund” the court observed prominent similarity in the plot, depiction and story with the registered script of “Slum Soccer”.Therefore, the Telangana High Court through its order dated October 19, 2020, restrained the telecast of the Amitabh Bachchan starrer ‘Jhund’ across India and abroad. The Defendants, aggrieved by this order, preferred an appeal before the Supreme Court, which agreed with the observation made by the subordinate court and refused to lift the stay ordered by the lower court. The case has brought up a significant issue with respect to whether true life events of a real person who is already in the public domain can be considered ‘property’ and whether the same would be entitled to copyright protection.

Microsoft Corporation and Ors. vs. Satveer Gaur and Ors

Microsoft Corporation, along with Adobe Systems and Quest Software (Plaintiffs) filed a suit of infringement before the Defendants, a company named ‘Chetu’ offering IT Services. It was the case of the Plaintiffs that the Defendant was using the unlicensed software programs of the Plaintiffs on its computers and offered the duplicated copies of the programs for sale, thereby causing incalculable damages to the Plaintiff’s Intellectual Properties and hard-earned goodwill.

The Delhi High Court found this an open-and-shut case since infringing copies of the Plaintiff’s software were confiscated from the Defendants, and the Court passed a decree in favour of the Plaintiff. Even though this may sound like a usual day at work for software giants fighting piracy and copyright infringement, cases like this speaks volume of the need for actions beyond just statutory and judicial remedies to tackle piracy. In the ever-growing technology-driven world, it would take a handful of clicks to illegally appropriate, reproduce, and sell software, making the author’s copyright and human labour employed behind it, fruitless.

Shivani Tibrewala vs. Rajat Mukherjee and Ors.

In yet another case of alleged plagiarism, the Hon’ble Mumbai High Court ruled that copyright does not subsist on the mere idea, but only on the expression of such an idea. The Hon’ble Court refuted the Plaintiff’s claim that the Defendant’s work “Umeed” was a substantial reproduction of her script of the play “The Laboratory” on the ground that, apart from the theme i.e., the malpractice of unethical drug testing on poor and needy individuals by pharmaceutical companies without obtaining informed consent of such individual, there was nothing in the two works which could be termed as similar.

Giant Rocket Media and Entertainment Pvt. Ltd. vs Ms. Priyanka Ghatak And Ors

Whether a true story written in a book by one of the Defendant qualifies to be considered “Original” under the requirement of the Copyright Act?

The above issue was considered a primary issue when the Plaintiff filed an infringement suit against the Defendants seeking an injunction and an ex-parte order against the Defendants. Defendant No.3 was a retired joint commissioner of CBI who was the author of the book “CBI Insider speaks: Birlas to Sheila Dikshit”, from which the Plaintiff wanted to use Chapter 7 i.e., the story of the murder of Syed Modi, and turn it into a web-series and had also sought the permission from Defendant No.3. The Plaintiff claimed that Defendant No.2 had infringed on the same idea with the help of Defendant No.1 and 3.

The court opined that since the story covered in Chapter 7 is a true story that was already a part of the public domain, the same would not have qualified as original work. However, the court was of the view that the Plaintiff cannot claim exclusive rights over the contents since it was merely a narration of the crime and prosecution. The court concluded that neither the Plaintiff has a prima facie case to seek an injunction nor did the Defendants act in a fair manner. The Delhi High Court dismissed the appeal for an interim injunction against the web-series released by Defendant No.2 and vacated the ex-parte ad-interim order.

Conclusion

The year 2020 has been yet another busy year for the music and film industry, with the Courts flooded with claims of plagiarism and copyright infringement. However, courts have been deeply disappointed to find out that a couple of those cases lacked bonafide intention from the litigants since they approached the Courts in the “eleventh hour” to seek an injunction. As we look towards 2021, we expect that copyright, music, and entertainment disputes will continue to yield decisions on such important issues as the “originality” in works based on true life events, a yardstick of difference in expression of the same underlying idea, and the need for a better regime to tackle piracy in the fast-paced digital world.

The year 2020 has been yet another busy year for the music and film industry, with the Courts flooded with claims of plagiarism and copyright infringement. However, courts have been deeply disappointed to find out that a couple of those cases lacked bonafide intention from the litigants since they approached the Courts in the “eleventh hour” to seek an injunction. As we look towards 2021, we expect that copyright, music, and entertainment disputes will continue to yield decisions on such important issues as the “originality” in works based on true life events, a yardstick of difference in expression of the same underlying idea, and the need for a better regime to tackle piracy in the fast-paced digital world.

Image Credits: Photo by Markus Winkler on Unsplash

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Intellectual Property Appellate Board (IPAB) Amongst Other Tribunals Abolished Through an Ordinance

In a bid to streamline the functioning of tribunals and avoid delay in the dispensation of justice, the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 has been promulgated by the President of India through a gazette notification dated April 04, 2021. A bill to the same effect had been passed in the Lok Sabha in February and was pending in the Rajya Sabha, however, the ordinance was brought in despite assurances that the bill would be sent to a standing committee for a review in light of opposition.

The ordinance is seen as another step in the process of rationalisation of tribunals that began in 2015 . Through the Finance Act, 2017, seven tribunals had been abolished or merged based on functional similarity, however, the Act underwent various legal challenges for being passed as a Money Bill in violation of Articles 107, 110 and 117 of the Constitution Of India and being against the basic tenet of independence of judiciary.

The Finance Act, 2017 had empowered the central government to notify rules on qualifications of members, terms and conditions of their service, and composition of search-cum-selection committees for 19 tribunals (such as Customs, Excise, and Service Tax Appellate Tribunal). The ordinance amends the 2017 Act to include provisions related to the composition of search-cum-selection committees, and term of office of members in the Act itself as directed by the Supreme Court in the Rojer Matthew Case . However, the ordinance limits the term of members to 4 years disregarding the Supreme Court’s decision in the IPAB Case 3, which stipulated a minimum term of 5 years.

The ordinance primarily dissolves existing appellate bodies under 9 statutes including the Intellectual Property Appellate Board (“IPAB” or the “Appellate Board”) and transfers their functioning to the concerned High Courts, Commercial Courts/Commercial Division of High Courts, Registrars, Central Government etc.

The amendments introduced by the ordinance across various IP statutes have been detailed below:

Trade Marks Act, 1999

  • The IPAB which was set up under Section 83 of the Trade Marks Act, 1999 to hear appeals against the Trademarks Registrar’s decisions under the Act has been abolished.
  • The ordinance also transfers the powers of the Board to the High Court and transfers the pending cases before IPAB to the respective High Courts under whose jurisdiction the Appeal would have been ordinarily filed.
  • To dismantle the Board, the ordinance has deleted provisions related to the IPAB including the establishment (Section 83) and composition of the Tribunal (Section 84), Qualification (Section 85), Term of Office (Section 86), Salaries (Section 88), Resignation and Removal (Section 89), Procedure and Powers (Section 92) Condition on interim order (Section 95) Chairman’s power to transfer cases from one branch to another from the Act.
  • To transfer the power and function of the Board to the High Court, the ordinance has lifted the bar on the jurisdiction of the court by deleting Section 93 from the Act. It further deletes the definition of Appellate Board, Bench, Chairman, Judicial Member, Member, tribunal, and Vice-Chairman from Section 2 (1) of the Act.
  • The ordinance amends the definition of “prescribed” from “prescribed by rules made under this Act” to “(i) in relation to proceedings before a High Court, prescribed by rules made by the High Court; and (ii) in other cases, prescribed by rules made under this Act.”
  • The ordinance substitutes the term “Tribunal” with “the Registrar or the High Court” and “Appellate Board” with “High Court” wherever they occur in the Act.
  • The ordinance has also carried out amendments identical to the above in the Geographical Indications of Goods (Registration and Protection) Act, 1999 to dismantle the IPAB and transfer the powers and functions to the High Court.

Copyright Act, 1957

  • Appellate Board established under the Copyright Act, 1957, which was empowered, among other things, to hear appeals against the orders of the Registrar of Copyrights has been dismantled and replaced with Commercial Courts, a division of High Courts. To do so, the ordinance has deleted provisions related to the Appellate Board including its definition under Section 2 (aa) of the Act.
  • It defines “Commercial Courts” under Section 2 (fa) of the Act as “Commercial Court, for the purposes of any State, means a Commercial Court constituted under section 3, or the Commercial Division of a High Court constituted under section 4 of the Commercial Courts Act, 2015”. The newly added definition gives “Commercial Courts” the same meaning as it has under Section 4 of the Commercial Courts Act, 2015.
  • It has replaced the term Appellate Board with “Commercial Courts” wherever they occur in the Act, except for Section 50 of the Act in which the term “Appellate Board” has been replaced with “High Court”.
  • The power of the Appellate Board to hear appeals against the orders of the Registrar of Copyrights will now be vested with a Single Judge of the High Court. The Single Judge has also been empowered to refer the case to a larger bench if the Judge deems fit.
  • Since the amendment mandates that any proceeding before the High Court or the Commercial Division of the High Court including proceeding under section 31D of the Act for fixation of royalties shall be as per the rules prescribed by the High Court which in this case shall be Commercial Courts Act, 2015.
  • Since section 14 of the Commercial Courts Act mandates expeditious disposal of appeals, we can expect better management of the backlog of Copyright related commercial disputes in the near future.

Cinematograph Act, 1952

  • The ordinance has abolished the Appellate Tribunal formed under the Cinematograph Act, 1952 by deleting Section 2(h) of the Act.
  • It replaces the term ‘Appellate Tribunal’ under Section 7C of the Act with ‘High Court’. Hence, the power of the Tribunal which was empowered to hear appeals against decisions of the Censor Board has been transferred to the concerned High Court. As a result, such appeals shall now be filed directly before the concerned High Court.

Protection of Plant Varieties and Farmers’ Rights Act, 2001

  • The Plant Varieties Protection Appellate Tribunal formed under Section 54 of the Protection of Plant Varieties and Farmers’ Rights Act, 2001 has been dismantled.
  • The ordinance has removed the provisions related to the Tribunal including the definition of Chairman, Member, Judicial Member, establishment (Section 54), composition (Section 55), the procedure of the Tribunal.
  • The term “Tribunal” has been substituted with “High Court” wherever they appear in the Act.
  • As a result, the power of the Tribunal which was empowered to hear appeals against decisions of the Registrar of Plant Varieties Registry and Protection of Plant Varieties and Farmers’ Rights Authority has been transferred to the concerned High Court.
  • Now all such appeals shall be filed directly before the concerned High Court, and any pending cases shall be transferred to the concerned High Court.

Patents Act, 1970

  • The Appellate Board formed under Section 116 of the Patents Act, 1970 which was vested with the power to hear appeals under Section 117A of the Act against orders of the Controller General of Patents, Designs and Trade Marks (“CGPDTM”) or the Central government has been abolished.
  • Much like the above amendments, the ordinance omits provisions related to the Appellate Board such as establishment (Section 116) and composition of the Board (Section 117), Procedure and Powers (Section 117B and 117D).
  • To transfer the power and function of the Board to the High Court, the ordinance has lifted the bar on the jurisdiction of the court by deleting Section 117C from the Act.
  • Prior to the amendment both the High Court and Appellate Board were supposed to function simultaneously, however, now Appellate Board has been omitted from all of those places. Further, wherever only the Appellate Board appeared, it has been substituted with the High Court.

Apart from the amendments to the statutes specified above, a transitional provision has been made to compensate outgoing tribunal members for the premature termination of term and reversion of officers on deputation to parent cadre, Ministry or Department. In addition, any appeal, application or proceeding pending before the Tribunal, Appellate Tribunal or other authorities, other than those pending before the Authority for Advance Rulings under the Income-tax Act, 1961, shall stand transferred to the Court before which it would lie as per the ordinance, and the Court may proceed to deal with such cases from the stage at which it stood before such transfer, or from any earlier stage, or de novo, as the Court may deem fit. Moreover, the balance of all monies received by the abolished authorities and not spent by it as well as properties owned by it shall stand transferred to the Central Government.

CONCLUSION

Few may consider it as a notable change in IP dispute resoltion, others including the Group of Industry Associations on Intellectual Property have opined their dissatisfaction regarding the move. Nevertheless, since the Appellate Boards were formed to fast-track the backlog of cases, and they failed to meet the desired objective, it appears to be a prudent move by the Government. It should be however kept in mind that since the Indian Judiciary is infamous for backlog of cases, mere abolishment of the Appellate Tribunal will be futile unless the special commercial courts/benches are equipped to handle these cases. The substitution of the Appellate Board with the High Courts and Commercial Courts in relation to Copyright disputes also means the cost of instituting the proceedings before the respective judicial bodies will be decided in accordance with the Code of Civil Procedure, 1908 and the Commercial Courts Act, 2015.

The abolition of the Appellate Board poses another problem with respect to the royalty rates that are due to be revisited by the end of this year. The ordinance may have further complicated the entire procedure under Section 31D of the Copyright Act. This means any procedure prescribed under the Copyright Rules, 2013 in relation to the above proceeding gets nullified and we can expect the Central Government to exercise its power under Section 21A of the Commercial Courts Act, 2015 to frame rules akin to Rule 31 of the Copyright Rules, 2013.

The content of this Article does not necessarily reflect the views / position of Fox Mandal but remain solely those of the authors.

“Read about the changes introduced through the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021.”

Image Credits: Photo by freestocks on Unsplash

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