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2020 In Rewind: Trademarks In India

The entrepreneurship space has seen major evolution with conducive policies and enabling technological environment in the past few years. Specifically, the digital landscape has levelled up in traffic and capabilities owing to the pandemic last year and everything moving online. With that, the intellectual property and technology laws are grappling to catch up to the developing situation and adequately protect the rights of the stakeholders in the sector. Until that happens effectively, the courts are taking a pro-active step to align the developments with the legal intentions and business requirements. With this in view, we witnessed some interesting case updates that took place in the field of trademarks and domain name disputes in the past year. Here is a brief of the key trademark-related updates in India that took place in the year 2020.

I.LEGISLATIVE DEVELOPMENTS

There was no significant legislative development in the trademark practice, apart from the Trademark Registry’s decision to go completely virtual with respect to prosecution hearings. The Trademark Registry and the Intellectual Property Appellate Board (IPAB) much like all the judicial and quasi-judicial bodies across the country, for the time being, has done away with the physical mode of hearing, and it is taking up matters via video conference.

II.SIGNIFICANT CASE LAWS

Here is a recap of key cases within the domain:

Amazon Seller Services Pvt. Ltd. & Ors. v. Amway India Enterprises Pvt. Ltd. & Ors. FAO(OS) 133/2019 |31-01-2020

In this case, the division bench of the Delhi High Court had set aside the lower court’s order restraining Amazon from allowing the sale of products of Amway India, a Direct Selling Entity, from its platform. Amway India filed a trademark infringement suit against Amazon on the ground that the e-commerce giant is liable as an intermediary for allowing and continuing to allow Amway India’s products (which it alleged were counterfeited products) to be listed on the former’s website by one of Amway’s direct seller. The lower court found Amazon liable for trademark infringement for non-observance of Direct Selling Guidelines and failing to demonstrate due diligence.   

The Division bench while setting aside the lower court’s order ruled that Direct Selling Guidelines are merely advisory to State Governments and Union Territories and they are not binding laws, and hence, it cannot be enforced against e-commerce intermediary. The Court further refuted the claim of trademark infringement on the ground that India follows the principle of international exhaustion of Trademarks, meaning once a good is lawfully acquired by the Direct Seller, the rights over the said good (including right re-sell) vested in the Direct Seller. Hence, Amazon as well as the seller were saved under the second sale exception to trademark infringement under section 30 (4) of the Trademarks Act, 1999.

Imagine Marketing Pvt. Ltd. V. Exotic Mile (CS(COMM) 519/2019) | 21-01-2020

The Plaintiff, commonly known in the market as “BoAt”, consumer electronics brand, sought an injunction against the Defendants from using the mark “BOULT” for the manufacture and sale of electronic audio gadgets mainly earphone, headphones, etc.

The Delhi High Court (single bench) had passed an interim injunction restraining the Defendant from using the mark “BOULT” ruling that it was deceptively similar to “BoAt” and that even their taglines were similar to each other. However, the Division Bench ordered a stay on the injunction order by stating that “prima facie there is no similarity visually or phonetically between the original Plaintiff and the Defendant.”

The matter is now evenly poised, and we await to see if the Division Bench would have a different take on its opinion after hearing the arguments.

Reckitt Benckiser (India) Pvt. Ltd v. Mohit Petrochemicals Pvt. Ltd. CS(COMM)No.141/2020 & I.A.Nos.4034-37/2020 | 28-05-2020

In an infringement suit filed by Reckitt Benckiser, the Delhi High Court while imposing Rupees One Lakh on Mohit Pharmaceuticals, permanently restrained them from selling hand sanitizers under the brand name “Devtol” which was considered deceptively similar to the Plaintiff’s well-known trademark “Dettol”.

M/s ITC Limited v. Nestle India Limited 2020 SCC OnLine Mad 1158 | 10-06-2020

ITC had launched its Sunfeast Yippie Noodles in two varieties – one of which was “Magic Masala”. Defendant i.e., Nestle had adopted the name “Magical Masala” for one of their instant noodle product. Since Plaintiff had not registered the expression “Magic Masala” as a trademark, it filed a passing-off suit against Defendant. Defendant affirmed that they were using the term “Magical Masala” as a flavour descriptor. The Defendants further contended that “Magic” and “Masala” were the two most common terms that were used in the culinary industry and therefore could not be monopolized.

The High Court of Madras held that the expressions “Magic” and “Masala” were common terms that were used on a day-to-day basis in the Indian food industry and Indian culinary, therefore the same could not be monopolized by the Plaintiff or the Defendant. The court further opined that even Plaintiff had used the term “Magic Masala” as a flavour descriptor rather than a trademark or a sub-brand. Therefore, the court concluded that ITC had used the term “Magic Masala” in a laudatory manner and the same could not be monopolized.  

Hindustan Unilever v. Endurance Domain and Ors. 2020 SCC Online Bom 809 | 12-06-2020

In this case, Plaintiff approached the Bombay High Court seeking to suspend domain names with Plaintiff’s HUL trademarks which were registered under the authority of Defendant, a domain name registrant. Even though the Court was quick to grant relief to the defendant, it opined that Domain name registrants were neither equipped nor authorized to indefinitely suspend domain names once registered, since there was no human element involved to oversee the legitimacy of domain names.

The Court ruled that deciding what should or should not be suspended (or blocked) is a serious judicial function that could be arrived at only by assessing and balancing rival merits. Moreover, the Court observed that anyone can use a VPN to bypass a proxy server or firewall and have access to such blocked websites by masking the originating country IP of the user, hence, such ‘access blocking’ only offers a hollow and faux sense of safety to the Registrant. Besides, holding the Registrar liable if he is unable to effectively block access would expose the Registrar to the constant threat of contempt proceedings.

International Society for Krishna Consciousness (ISKON) v. Iskon Apparel Pvt. Ltd and Ors. 2020 SCC Online Bom 729 | 26-06-2020

In a trademark infringement and passing off suit instituted against the Defendant’s use of ISKON APPAREL, the Court while restricting Defendant from using the same ruled that ISKON is a well-known mark. This was a follow-up to Plaintiff’s pleading that the trademark “ISKON” be declared a well-known trademark. Plaintiff submitted that it was the first to create the name in the year 1996 in New York and over time it has created a global presence which is inclusive of India and the brand was not restricted to only one particular good or service but was into the diverse range of goods and services. The court after scrutinizing the evidence submitted by Plaintiff ruled that the brand name “ISKON” fell under the ambit of a well-known mark under the Trademark Acts of 1999.

Louis Vuitton Malletier vs Futuretimes Technology India Pvt Ltd CS(COMM) 222/2020 | 03-07-2020

Louis Vuitton had filed a civil suit against the Defendants, an e-commerce platform named Club Factory to restrain the sale of any counterfeit goods comprising their trademark. The Plaintiff prayed that the Defendants be restrained from selling any product with Plaintiff’s trademark, including “LOUIS VUITTON”, “LV Logo”, Toile monogram pattern, Damier pattern and/or LV flower pattern, or any other similar pattern that would constitute an infringement of the Plaintiff’s registered marks. The Delhi High Court, acting on it, issued summon notice to the Defendants. We wait to see if this case takes the same route as the case of Amazon Seller Services Pvt. Ltd. & Ors. v. Amway India Enterprises Pvt. Ltd. & Ors. FAO(OS) 133/2019, to base the outcome on the evidence of counterfeited products or if it holds Club Factory liable in case the Defendant fails to demonstrate the minimum standard of due diligence as required from an intermediary. 

Arudra Engineers Pvt. Ltd. v. Pathanjali Ayurved Ltd. & Anr. 2020 SCC OnLine Mad 1503 | 17-07-2020

Defendant, Patanjali, was restrained from using the word “Coronil” to market its product i.e., immunity booster tablets which Defendant claimed to have passed the test of clinical trials to cure coronavirus. The Court held that since Plaintiff had acquired registration of the trademark ‘CORONIL- 92 B’ in 1993 and had been using the same in relation to Acid inhibitor for industrial cleaning, Defendant’s action amounted to infringement under Section 29(4) of Trademarks Act, 1999. The court also opined that Patanjali’s use of the word ‘Coronil’ could deceive the consumers with respect to the likelihood of curing coronavirus through the tablet. Hence, considering the reputation of Plaintiff’s registered trademark and the larger public interest, the Court restrained Plaintiff from marketing its product under the name “Coronil”.  

Plex, Inc v. Zee Entertainment Enterprises Limited 2020 SCC OnLine Bom 989 | 01-10-2020

The Bombay High Court refused to grant an interim injunction as sought by Plaintiff (Plex) against ZEEPLEX, a pay-per-view service launched by Zee. The Court reasoned that Plaintiff’s case of passing off failed the trinity test since it was unable to establish any reputation, the similarity in services, and anticipated injury due to the adoption and use of ZEEPLEX, while Defendant had a long-standing reputation in India.    

Delhivery Private Ltd. v. Treasure Vase Ventures Private Ltd.  CS (COMM) 217/2020 | 12/10/2020

In an infringement suit by the logistics company “Delhivery” against the user of the mark “Deliver-E” for identical services, Delhi High Court held that Delhivery was a generic name describing the kind of service it provided i.e., delivery, and hence, it did not have the characteristics of an enforceable trademark.

Anil Rathi v. Shri Sharma Steeltech CS(COMM) 654/2019 | 23-10-2020

The Delhi High Court ruled that the use of the personal name, surname, or family name under Section 35 of Trademarks Act, 1999 was limited to personal use only and such rights did not extend to granting licenses to third parties for commercial use. In the instant case, Plaintiff had approached the Delhi High Court seeking an injunction against the use of the surname “RATHI” as a trademark by Defendant. The Court observed that there was a family arrangement in place which regulated the use of the family mark, and the act of Defendant of licensing the mark to third parties was in clear violation of the said arrangement, making Defendant liable for trademark infringement.

The PS5 Case Trademark Squatting Case: TM Opposition by Sony Interactive Entertainment Inc [Opposition No. 1040632] against TM Application PS5 [Application No. 4332863] filed in Class 28 by Hitesh Aswani

Sony’s launch of its latest edition of gaming console Play Station 5 of PS5 in India was halted when it discovered that an infamous trademark squatter named Hitesh Aswani had surreptitiously filed a trademark application for “PS5” on October 29, 2020, for the identical specification of goods that were covered under Sony’s PS4 trademark registration bearing application no. 2481440. Sony, understandably, filed an opposition against the said trademark, and the Applicant withdrew his application.

Sony filed its earliest trademark application for the mark “PS5” in Jamaica before Hitesh Aswani on October 03, 2019. Sony used the Jamaican application as the basic application to file international registration through the Madrid Protocol, claiming priority of October 03, 2019.

This was a textbook case of trademark squatting. Sony had priority over the squatter, and it is a settled position of law that priority trumps everything else as per law in India. Further, the mala fide intention of the squatter was evident from the almost verbatim replication of the specification of goods covered under Sony’s PS4 trademark registration.

This case reached its logical conclusion when Hitesh Aswani withdrew his application as well as the opposition which paved the way for Sony to register its mark in India and proceed to launch the product in India.

Sassoon Fab International Pvt Ltd. v. Sanjay Garg & Ors. [IPAB] ORA/171/2020/TM/DEL | 04-12-2020

In one of the most noteworthy cases that came up before the Intellectual Property Appellate Board (IPAB), the registration of the mark ‘N95’ bearing App No. 4487559 registered in Class 10 in favour of Mr. Sanjay Garg was stayed. IPAB observed that the N95 was prima facie a generic term that was used to provide the quality of the masks hence it was hit by Section 9 of the Act. Since Plaintiff had filed a rectification petition against the registration of the said mark before filing the instant petition, IPAB deemed it necessary to stay the operation of the Registration until the Rectification Application was finally decided and disposed of.     

Gujarat Cooperative Milk Marketing Federation Ltd. & Anr vs. Amul Franchise.in & Ors CS(Comm) 350/2020

This case concerned fraudulent registration of multiple websites with the term “AMUL” as prefix/suffix. In this case, the Delhi High Court directed the Registrar of Domains to suspend/block domain names containing the term “Amul”. The Court also restrained the Registrar from the further offering for sale of such domain names so ordered to be blocked.

The Delhi High Court rejected the Registrar’s contention that due to lack of adequate technology it cannot ensure that these websites containing ‘AMUL’ therein would not be made available for sale and suggested that the Registrar could utilize the same filter it employs to ensure that websites under obscene and/or words denoting illegality are not available for sale. This decision is in stark contrast with an earlier single judge bench order of the Bombay High Court dated June 12, 2020 – Hindustan Unilever Limited v. Endurance Domains Technology LLP, 2020 SCC OnLine Bom 809wherein it held that Domain name registrants are neither equipped nor authorized to indefinitely suspend domain names once registered, since there is no human element involved to oversee the legitimacy of domain names.

CONCLUSION

Despite the majority of the judicial pronouncements being related to COVID-19 and lockdowns, 2020 will be the year that the Trademark Authority tightened its grip on trademark squatting, a way to curb the sales of counterfeit products on e-commerce platforms. Also, the IPAB’s order to put a stay on the registration of “N95” for medical equipment and apparatus exhibited the dismal examination standards at the Trademarks Registry since the term ‘N95’ is generic to medical products and no amount of use can justify the registration. We witnessed a handful of contrasting rulings in the year 2020 and a couple of disputes are lined up to be adjudicated in the year 2021. These are a few topics that are revisited time and again to not only protect the proprietors of the registered trademarks but also make sure that no defendant is being harassed unnecessarily by registered proprietors.  

 

Image Credits: Photo by Riccardo Annandale on Unsplash

Despite the majority of the judicial pronouncements being related to COVID-19 and lockdowns, 2020 will be the year that the Trademark Authority tightened its grip on trademark squatting, a way to curb the sales of counterfeit products on e-commerce platforms. 

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Delhi High Court Suspends CGPDTM Notice Fixing the IP Applications Cut-off Date

The Hon’ble Delhi High Court has suspended the operation of a public notice issued by the Controller General of Patents, Designs and Trademarks (CGPDTM) that had fixed the cut-off date (18.05.2020) for completion of various acts/proceedings, filings, payment of fees and other deadlines that had fallen due during this lockdown. The public notice was found to be contrary to the Supreme Court order which extended the period of limitation applicable to all proceedings before all Courts and Tribunals with effect from 15th March 2020 till further orders.

 

Keeping in mind the extraordinary situation prevailing in the Country attributable to the lockdown announced by the Government, causing difficulties to litigants/advocates in filing their petitions/suits/applications/appeals/or other proceedings, etc. within the limitation period, the Hon’ble Supreme Court had Suo Motu registered a case numbered as Suo Motu Writ Petition (Civil) Nos. 3/2020 titled Re: Cognisance for Extension of Limitation.  

Invoking its plenary power conferred by the Constitution under Articles 141 & 142, the Bench comprising of Hon’ble Chief Justice S.A. Bobde, Hon’ble Justice L. Nageswara Rao & Hon’ble Justice Surya Kant passed the Order dated 23rd March 2020 extending the period of limitation applicable to all proceedings before all Courts and Tribunals governed by general law or special laws whether condonable or not with effect from 15th March 2020 till further orders.

The CGPDTM had issued a Public Notice dated 4th May 2020 informing applicants/registrants and/or its agents/advocates that the due-dates with respect to timelines/periods prescribed under the IP Acts and Rules, falling due during the lockdown, to complete various acts/proceedings, filing of any reply/document, payment of fees, etc. in the matter of any Intellectual Property (IP) applications, shall be 18th May 2020, since the lockdown period from 25th March 2020 to 3rd May 2020 was further extended by two weeks, i.e., till 17th May 2020.

Aggrieved by this public notice, a writ petition (W.P.(C) No.3059/2020) was filed before the Delhi High Court on 06.05.2020 by the Intellectual Property Attorneys Association (IPAA) challenging the said notice. The petitioners submitted that the public notice issued by the CGPDTM is a blatant disregard to the order of Hon’ble Supreme Court dated 23rd March 2020, and specifically conferred the following arguments:  

  1. The order of extension of limitation is applicable to all proceedings irrespective of whether it was governed by general laws or special laws and would be in force with effect from 15th March 2020, as opposed to 25th March 2020 as mentioned in the public notice.
  1. The said extension of limitation shall be in effect until further orders. Hence, the cut-off due-date of 18th May 2020, fixed by the CGPDTM in the public notice, for the completion of various acts/proceedings, filings, payment of fees, etc. in the matters of any IP applications, is also contrary to the Supreme Court order. 
  1. The said due date of 18th May 2020 would also pose difficulties to litigants/advocates to obtain necessary documents/files and file them as per the prescribed procedures, since the lockdown would only be lifted on 17th May 2020.

The Hon’ble Delhi High Court, taking into consideration the Supreme Court Order dated 23.03.2020 and the arguments of the petitioners, passed an Order dated 11th May 2020, holding that no Court, Tribunal, or Authority can act contrary to the order of the Supreme Court. Further, as per Article 144 of the Constitution, all authorities whether civil or judicial, located in the territory of India are required to act in aid of the orders passed by the Supreme Court. The Court also agreed that the period of limitation would stand effective from 15th March 2020 and not from 25th March 2020 as provided in the public notice. 

The Hon’ble Delhi High Court hence rightly held that order of Hon’ble Supreme Court was binding on the CGPDTM and disposed of the petition by suspending the operation of the public notice dated 4th May 2020.

The Hon’ble Delhi High Court has suspended the operation of a public notice issued by the Controller General of Patents, Designs and Trademarks (CGPDTM) that had fixed the cut-off date (18.05.2020) for completion of various acts/proceedings, filings, payment of fees and other deadlines that had fallen due during this lockdown. The public notice was found to be contrary to the Supreme Court order which extended the period of limitation applicable to all proceedings before all Courts and Tribunals with effect from 15th March 2020 till further orders.

Image Credits: Photo by samer daboul from Pexels

The Hon’ble Delhi High Court, taking into consideration the Supreme Court Order dated 23.03.2020 and the arguments of the petitioners, passed an Order dated 11th May 2020, holding that no Court, Tribunal or Authority can act contrary to the order of the Supreme Court. Further, as per Article 144 of the Constitution, all authorities whether civil or judicial, located in the territory of India are required to act in aid of the orders passed by the Supreme Court. The Court also agreed that the period of limitation would stand effective from 15th March 2020 and not from 25th March 2020 as provided in the public notice. 

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The Orphan Treatment of Orphan Drugs

“Orphan drugs” are pharmaceutical products used for the diagnosis, prevention or treatment of rare diseases. The definition of rare diseases varies from country to country. e.g. in the United States, a rare disease is defined as a condition that affects fewer than 200,000 people whereas in Europe it is less than one person per 2,000. Nevertheless, it is generally accepted that a disease having fewer than 100 patients per 100,000 population is a rare disease. It is assessed that internationally, around 6000 to 8000 rare diseases are in existence with new ones being discovered quite regularly. Moreover, it is estimated that there are approx. 4000-5000 rare diseases for which there are no treatments available.

In India, the rare disease and disorder population is between 72 to 96 million and up to 450 rare diseases have been recognized[i]. Because rare diseases affect a very small population of individuals and the profit potential is poor, pharmaceutical companies often do not take much interest in developing molecules for the treatment of these diseases. The shelving of these molecules and ignorance of the small patient pool gave rise to the concept of ‘pharmaceutical orphans.’

Orphan drugs and policies in India

In India, almost all orphan drugs are imported. The primary reason being lack of infrastructure, high cost and time, no cost of return, and no clear policy on orphan drugs and rare diseases. Although the disquiet around the development of orphan drugs resulted in an Orphan Drugs Act as early as 1983 in the United States, India has lagged behind for decades with the first ‘National Policy on Treatment of Rare Diseases’ coming out as late as 2017. Further, there are no epidemiological data, no figures on the burden of rare diseases and morbidity and mortality associated with them. In fact, until last year, India did not even have a definition of ‘orphan drugs.’ The new Drugs & Clinical Trial Rules 2019 finally defined it as “a drug intended to treat a condition which affects not more than five lakh persons in India”.

Drugs and Clinical Trials Rules, 2019:

In March 2019 Central Drugs Standard Control Organization (CDSCO) released New Drugs and Clinical Trials Rules, 2019. As per these new guidelines, local clinical trials (data) may not be required for orphan drugs permitted to be imported for sale or distribution. Further, the Expeditious Review Process could be sought for approval of a new drug after clinical development (applicable for Orphan Drugs). Furthermore, no fee shall be chargeable in respect of an application for conduct of clinical trial for orphan drugs.

New Drug Exemption Rule, 2019:

Further encouragement for orphan drug development could be seen in the New Drug Exemption rule released in January 2019. Under this rule, all new drugs patented in India were to be exempted from price control for five years. The five-year window starts from the date when the manufacturer starts commercial marketing in India. The Government has also exempted such drugs from price control that are used for the treatment of a disease that qualifies as Orphan Disease in the opinion of the Ministry of Health and Family Welfare (“Orphan Drug Exemption”). However, these rules are not devoid of shortcomings which may bring about issues during implementation. The requirement of the use of the exemption for five years from the “date of commencement of commercial marketing by the manufacturer in the country” is ambiguous as there is no legal definition of what amounts to ‘commercial or business marketing’ in India. The second issue that needs clarification is the exemption from price control available to ‘manufacturers’ of the patented new drug rather than the ‘drug’ itself. As a result, multiple manufacturers, importers, marketers of the same drug would seek to benefit from the exemption which could pose a challenge when the date of commercial marketing of different manufacturers would vary from each other. The third most important issue with absolute market exclusivity is that cost of orphan drugs per treatment episode could be extremely high.

Rare diseases as a public health issue

When a person contracts a rare disease, it not only puts an emotional strain on him/her, it also puts a heavy financial strain on his family. In addition to this, the unavailability of proper treatment remains a big challenge. Internationally, there are very few pharmaceutical companies, which are actively working on orphan drugs or rare diseases. And in India, the problem is more worrisome because there are hardly any pharmaceutical companies engaged in the development of these drugs. In addition, lack of awareness among the medical fraternity, lack of epidemiological data, lack of dedicated healthcare policies, schemes, and diagnostic facilities are some of the major hurdles that Indian pharmaceutical companies have to deal with.

The new drug exemption policy along with the CDSCO released new Drugs and Clinical Trials Rules, 2019 could provide the necessary impetus to the research and development of orphan drugs in India. However, there are still major strides that could be taken in line with other international governments which provide incentives ranging from tax credits to priority review vouchers in addition to fast track approvals by regulatory agencies, market exclusivity, fee reductions for regulatory approvals. Nevertheless, incentives should be balanced so as not to encourage pharmaceutical companies to exploit them to manufacture drugs for sub-categories of existing diseases to maximize profits by making existing drugs outrageously costly and inaccessible.

Hence, a more robust policy is imperative to devise a multipronged and multisectoral approach to build India’s capacity to tackle rare diseases comprehensively. Particularly, in areas of – obtaining requisite funding, creation of an extensive database, for cost estimation of the treatment; research and development for the treatment and diagnostic modalities, including through international/regional collaborations; training of health care providers; awareness generation; creating a conducive environment for drug development and measures for ensuring affordability of treatment, etc. With the necessary government action, hopefully, the orphan treatment of orphan drugs will minimize to give some respite to the patients.

A more robust policy is imperative to devise a multipronged and multisectoral approach to build India’s capacity to tackle rare diseases comprehensively. 

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Developments in the Indian Patent Law in 2019

As per the latest WIPO report, India has emerged as one of the top 10 countries in the ranking of filings of intellectual property applications while showing an increase of 7.5% in the number of patent applications.

The year 2019 saw some drastic widening of the scope and horizons of the patent laws. Various rulings and legislations were laid down making the sector more efficient in its functioning. The Patent Law has been liberalised to a great extent thereby providing a conducive atmosphere for start-ups and other small entities to hit the ground running. Also, the offer of 450 patents for free access to industries by DRDO for commercial exploitation was a shot in the arm.

The legislative developments together with the policies and significant case studies instrumental in widening the ambit of the patent laws are listed hereunder:

LEGISLATIVE AND POLICY DEVELOPMENTS

 

  • Publication of A New List of Scientific Advisors by the Patent Office[i]

 As per the Patent Rules, 2003, a list of Scientific Advisors must be released and updated annually. The list was last updated in 2010 and after nearly a decade, the list was issued in 2019 with 37 new enrolments. The list includes 2 Patent Agents. The duty of these advisors broadly includes guiding the Court and providing reports on questions involving technical substance.

 

  • Bilateral Patent Prosecution Programme[ii]

The Government approved the Bilateral Patent Prosecution Highway Programme between India and Japan. This programme enables accelerated examination of applications as it cuts down on duplication of work. Once a patent is granted in one country, the process of approval gets easier when filed in another country as it is assumed that the application must have gone through the rigorous process of exhaustive searches and technicalities in the previous country thereby enabling speedy disposal of applications. The process becomes much simpler, quicker and economical.

Under this pilot programme, Indian Patent Office can receive patent applications in certain specified technical fields only, like electrical, electronics, computer science, information technology, physics, civil, mechanical, textiles, automobiles and metallurgy, however, Japan Patent Office can receive applications in all fields of technology. This programme is initially restricted to a period of 3 years. If there are no major implemental gaps, this will be highly beneficial to Indian inventors including start-ups and MSMEs.

 Accelerated / expedited examination process

The amended rules include additional categories of applicants who can avail of expedited examination of their patent application. Such categories being small entities/MSME’s, Women applicants, Departments of Government, Institutions owned or controlled by the Government, Institutions wholly or substantially financed by the Government, Government companies; and Applicants of those countries whose patent offices are in an agreement / arrangement with the Indian Patent Office.

Fees and documents for start-ups and small entities

The second proviso to sub-rule (1) of Rule 7 has been substituted to clarify that start- ups and small entities must submit Form 28 along with the documents requiring a discount on the official fee. However, this amendment was merely expository in nature as, in practice, the Patent Office had already mandated the filing of the said form.

Medium of transmission of documents by patent agents

Rule 6(1A) was substituted and now provides that patent agents will have to file duly authenticated documents only via electronic medium. However, any document that is specifically asked to be reported/submitted in original by the Patent Office should be filed within 15 days of such request.

Transmittal and certified copy fee no longer applicable

In order to encourage electronic filing of PCT application, the Rules have been amended by deleting transmittal fees which the applicants were required to pay to the Indian Patent Office earlier. However, if the applications are filed physically then the same transmission fee as prescribed under the principal Patent Rule shall be applicable.

SIGNIFICANT CASE LAWS

  • Nuziveedu Seeds Ltd. And Ors. Vs Monsanto Technology LLC and Ors[iv]

The Hon’ble Supreme Court held that cases involving technical and scientific questions about patentability and exclusion of a patent were to be duly considered and examined at the stage of the final hearing. Expert advice and extensive inputs on technical aspects of a patent were purely unnecessary for granting injunctive relief. In the instant case highly complex question regarding the technical aspects of a patent was involved along with the compliance of a sub-licensing agreement between the plaintiff and the defendant. The patentee had terminated the agreement abruptly and filed for injunction restraining the defendants from using the patent as per the agreement. The single judge bench ordered compliance with the agreement and did not allow injunction. On appeal, the Division bench investigated the technicalities and ruled in favour of the plaintiffs. However, when appealed to the Supreme Court, it held that the judgement by the learned Single judge bench was in order and did not merit any interference.

  • Bayer Corporation v. Union Of India & Ors[v]

The Delhi High Court held that export of patented invention is also included under section 107(A) of the Patents Act, 1970 i.e., Bolar exception (rights granted to a patentee-making, using, constructing, selling and importing of their patented invention). However, the inclusion of ‘export’ needs to be duly regulated through the reasonably related test which shall differ from case to case to ensure that such exception is not misused. The ‘export’ should be reasonably related to research, development and submission of the information for obtaining regulatory approval from the authorities. In the present case, the issue was whether export of patented products for the purpose of research and development amounted to infringement and whether the export fell within the Bolar exception. The concept of patent linkage was extensively discussed. The case was decided in favour of the Respondents and exporting of the patented product for R&D was interpreted to be well within the Bolar exception under Sec 107(A).

  • Natco Pharma Limited v. Bristol Myers Squibb Holdings Ireland Unlimited Company and Others[vi]

The Hon’ble Delhi High Court reiterated the importance of considering the three-element test for the grant of an interim injunction (Prima facie case, the balance of convenience, irreparable injury). Such reiteration was considered essential to regulate the grant of injunction orders, especially in cases of pharmaceutical patent infringement. In the present case the respondents filed a suit seeking an interim injunction restraining the appellants from commercialising and initiating the sale of the appellant’s patented product. The Single Judge bench ordered interim injunction but on appeal, the Hon’ble High Court declared that interim injunction could not be granted merely on peripheral consideration of facts without applying the three-element test of interim injunction.

  • Ferid Allaniv Union of India And Ors[vii]

In this case the Petitioner had filed a patent application for a computer-related invention and the same was rejected. On appeal to the IPAB, the application was again rejected on the grounds of lack of novelty and lack of technological advancement or technical effect. The petitioner further appealed to the High Court of Delhi where the scope of Section 3(k) of The Indian Patent Act, 1970 and the term ‘technical effect’ was examined. The Court held that there existed no absolute bar on the patentability of computer-related inventions. However, it was subject to technical effect and advancement derived via such invention. The court directed for a re-examination of the patent application in accordance with the law.

  • Communication Components Antenna Inc. v. Ace Technologies Corp and Ors.[viii]

This landmark judgement emphasised on the necessity of a wide claim. It was further clarified that claims granted in India would take precedence over claims granted in a foreign jurisdiction while determining an infringement suit. In the present case the plaintiff sought permanent injunction claiming infringement of one of its patents that he had acquired in India. The product was granted a corresponding patent in the US. When a conflict over infringement of the Indian claim came up, the High court strictly stated that an infringement in such claim would be strictly confined and viewed in accordance with the claims granted in India and not the foreign claims although they might persist.

  • Pharmacyclics LLC v. Union of India & Ors.[ix]

In this landmark case, the Delhi High Court issued wide guidelines on post grant opposition. In this instance, the court allowed evidence to be produced considering the dates for the final hearing were fixed and evidence was filed prior to the hearing which was eventually adjourned at the request of the party. Further, there existed a reasonable time for the parties to respond to the filings previously made. The Hon’ble court while disposing of the matter laid down certain guidelines to be duly complied with in cases dealing with post grant oppositions. These included the filing of initial pleadings by the parties by relying on various documents and expert testimonies. Moreover, Rule 59 was to be strictly adhered to. Further evidence was not permissible once the material was transmitted to the opposition board. In addition, further evidence would only be entertained prior to the issuance of hearing under Rule 60. Moreover, publicly available documents can be provided 5 days prior to the hearing by highlighting the relevant portions. Also, the authenticity of the document is important.

 

 

References 

[i] http://ipindia.nic.in/writereaddata/Portal/Images/pdf/List_of_Scientific_Advisers_as_on_6Sept2019.pdf

[ii] https://dipp.gov.in/sites/default/files/PressBrief_Japan_21November2019.pdf

[iii] http://www.ipindia.nic.in/writereaddata/Portal/News/569_1_The_Patent_Amendment_Rules_2019_.pdf

[iv] CIVIL APPEAL NOS.4616¬4617 OF 2018

[v] LPA No.359/2017, CM Nos.17922/2017, 20160/2017, 33383-84/2017, 47167/2017 & 660/2018

[vi] FAO(OS) (COMM) 160/2019 and C.M.No.31063/2019

[vii] W.P.(C) 7/2014 & CM APPL. 40736/2019

[viii] CS (Comm) No. 1222/2018

[ix] CM APPL.54097/2019

 

 

Image Credits: Paul Skorupskas on Unsplash

The year 2019 saw some drastic widening of the scope and horizons of the patent laws. Various rulings and legislations were laid down making the sector more efficient in its functioning. The Patent Law has been liberalised to a great extent thereby providing a conducive atmosphere for start-ups and other small entities to hit the ground running.

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Development in Indian Copyrights Law in 2019

With the digital movement coming of age, the scope of copyright protection has expanded in the past year to a notch higher and effective regulations have been launched to deal with the expansion.

Some of the essential legislation and rulings that shaped the Indian Copyrights law in 2019 are stated hereunder:

LEGISLATIVE DEVELOPMENTS

 

  1. Copyright (Amendment) Rules 2019

The Department for Promotion of Industry and Internal Trade (DPIIT) vide its press statement dated May 30, 2019 proposed to introduce the Copyright Amendment Rules, 2019[1].  The draft rules aimed at ensuring smooth and flawless compliance of the Copyright Act in the light of technological advancement in the digital era and to bring them in parity with other relevant legislations. They sought to broaden the scope of issuance of statutory licences under section 31-D of the Act for broadcasting work subject to copyright protection by replacing ‘radio and television broadcast’ with ‘each mode of broadcasting’ under rules 29, 30, 31. This amendment came at the backdrop of  Tips Industries Ltd. vs. Wynk Music Ltd. & Anr.[2], where the need to include streaming under the preview of broadcasting was realised under the statutory licensing scheme. The draft also provided for stricter code of conduct for copyright societies and more. 

  1. Cinematograph (Amendment) Act, 2019

The Ministry of Information and Broadcasting on Feb 12, 2019 introduced Cinematograph (Amendment) Bill 2019[3] which aims to curb film piracy and imposes stricter penalties and punishments in this accord. The scope of unauthorised use of audio-visual recordings has been widened to include unauthorised camcording and transmission thereof. Strict deterrence can be traced in the proposed bill as intense penal provisions are attracted in the case of making and transmitting copies of a cinematograph film or audio-visual recording without acquiring approval from the owner of such work.

Notable Case Laws

Some of the noteworthy copyright cases for the year 2019 would be:

1.      Roger Mathew v. South Indian Bank Limited[4]

The Supreme Court of India struck down the Tribunal, Appellate Tribunal, and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 framed under the Finance Act, 2017 on the ground that it gave excessive and discretionary powers to the government as to the appointment of service persons to the tribunal and it also affected the judicial independence of the Tribunals. The dilution and encroachment on the judicial domain through the appointment of technical and other members, devoid of either adjudicatory experience or legal knowledge, to the IPAB after the merger of Copyright Board and IPAB was a matter of great concern. However, since this development could not be implemented retrospectively, the appointment already made remained unaffected. 

2.      UTV Software Communication Ltd. & Ors. v. 1337X.TO & Ors[5]

The Delhi High Court introduced a dynamic injunction into Indian jurisdiction to curb online piracy. Through this, Plaintiff could get the order executed against mirror/redirect/alphanumeric websites hosting the same infringing content as those already blocked.

  1. Sajeev Pillai v. Venu Kunnapalli & Anr[6]

It was the case of Plaintiff that the storyline of the defendant’s movie titled Mamankam was the result of the extensive research work done by Plaintiff. Plaintiff had assigned his work which included the story, script, screenplay, and dialogue to the defendant. The Kerala High Court held that the author has a legitimate right to claim authorship even after assignment and the later act does not exhaust the moral right of the author within the meaning of section 57(1) of the Copyright Act, 1957. However, since the movie is the distorted version of the plaintiff’s work due to the mutilation and modification of the original script, the court took a balanced view and allowed the movie to be released without crediting anyone as the author thereof till the final disposal of the suit. 

  1. Tips Industries Ltd. vs. Wynk Music Ltd. & Anr[7]

The Hon’ble Bombay High court interpreted section 31D of the Copyright Act, 1957 as an exception to the copyright laws. It is further stated that statutory licensing extends to only radio and television broadcasting and is exclusive of internet broadcasting. Therefore, online streaming services don’t fall within the ambit of statutory licensing. The flaw could, however, be fixed via the new “Copyright Amendment Rules 2019” stated the Hon’ble court. In the instant case, the defendant’s feature to allow its consumers to download music and store the same for unlimited usage amounted to sale thereby not constituting broadcast stated in 31D of the Copyright act. Therefore, the defendant was not required to avail of a statutory license.

  1. Yash Raj Films v. Sri Sai Ganesh Productions[8]

The plaintiff (Yash Raj) instituted a copyright infringement suit against the defendant for the reproduction of the copyrighted work subsisting in the plaintiff’s movie titled “Band Baja Baraat” through a Telugu remake titled “Jabardasth” without taking prior permission of the plaintiff.    

The Hon’ble High court was of the view that “to make a copy of the film‟ did not mean just to make a physical copy of the film by a process of duplication, but it also referred to another film which substantially, fundamentally, essentially, and materially resembled/reproduced the original film. The defendants had blatantly copied the fundamental, essential and distinctive features as well as forms and expression of the plaintiff’s film on purpose and consequently, infringed the plaintiff’s copyright.

  1. Raj Rewal v. Union of India & Ors[9]

The Hon’ble Delhi High court in the instant case dealt with a significant question of copyright law i.e., whether an author’s (architect’s) rights foreshadow the rights of the property owner. It was answered in the negative, i.e. the property owner’s right as per constitutional right under Article 300A shall be held more vital and that he/she can choose to destruct or modify the building on his/her property. Therefore, the Owner’s right shall precede the Author’s right under Sec 57 of the Copyright Act.

  1. Thiagarajan Kumararaja v. M/s Capital Film Works and Anr[10]

The Hon’ble Madras High Court for the first time deliberated a ruling on rights of the producer qua the author of the script with regard to the dubbing of the film and held that the producer of the film has the right to dub the film in any other language provided there isn’t any agreement to the contrary. Under Section 2(d)(v) in relation to a cinematograph film, the producer is the author and since they had taken the initiative and the responsibility for making the work i.e., cinematograph film, they had the right to dub the same. Accordingly, the infringement suit for dubbing the film in another language was dismissed and decided in favour of the producer.

 

CONCLUSION

From defending the right of the producer to dub in other languages, to continuance of the moral right of the author even after the assignment of work, it can be said that the year 2019 has been a busy year for the music and film industry. The introduction of the dynamic injunction against rogue websites was a much-needed change for the empowerment of lawful owners of copyrighted work to battle piracy. Further, the online copyright application system has progressively become filer-friendly in the past year[11]. In addition, increased transparency and stakeholder participation has created a protective environment for enhanced copyright preservation.

References 

[1] Available at http://copyright.gov.in/Documents/pdfgazette.pdf

[2] Commercial Suit IP (L) No. 114 of 2018

[3] https://prsindia.org/sites/default/files/bill_files/Cinematograph%20%28A%29%20Bill%2C%202019.pdf

[4]  Civil Appeal No. 8588 of 2019, SLP No. No.15804 of 2017

[5] CS(COMM) 724/2017

[6] FAO.No.191 OF 2019

[7] Commercial Suit IP (L) No. 114 of 2018

[8] CS (COMM) 1329/2016

[9] CS (Comm) No. 3 of 2018

[10] Original Side Appeal No. 22 of 2017

[11] http://www.ipindia.nic.in/writereaddata/Portal/IPOAnnualReport/1_110_1_Annual_Report_2017-18_English.pd


Image Credits: Noor Younis on Unsplash

From defending the right of the producer to dub in other languages, to continuance of the moral right of the author even after the assignment of work, it can be said that the year 2019 has been a busy year for the music and film industry. The introduction of the dynamic injunction against rogue websites was a much-needed change for the empowerment of lawful owners of copyrighted work to battle piracy.

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Development in Indian Trademark Law in 2019

India moved up one spot up in terms of trademark filings from its previous year’s ranking according to the World Intellectual Property Indicators published in October 2019. The report also pointed out a large increase in trademark filing activity in India i.e. more than 20.9% with resident filing activity overwhelmingly contributing to the double-digit growth. Having remained below 100,000 until 2006, India’s trademark annual filings now exceed 320,000.

The year also saw some judicial and policy development enabling efficient functioning of the trademark laws in the said context. Legislations have also tried to catch up with the ever-increasing activity in the digital space. Some of the essential enactments and pronouncements are stated hereunder:

 

LEGISLATIVE & POLICY DEVELOPMENTS

 

  1. National E-Commerce Policy [Draft]

The Department for Promotion of Industry and Internal Trade (DPIIT) on February 23, 2019 released the National E-commerce Policy[1] to prepare and enable stakeholders to fully benefit from the opportunities that would arise from progressive digitalization of the domestic digital economy. The draft policy laid special emphasis on the compulsory adoption of anti-counterfeiting and anti-piracy mechanisms by E-commerce platforms. Such adoption would not only curb piracy and counterfeiting but would further make the transactions explicit for the sellers, trademark owners and consumers enabling the system to work transparently.

  1. Trade Mark Registry’s Proposal to Restrict Access to Certain Documents

The Ministry of Commerce & Industries on September 06, 2019, issued a public notice[2] inviting suggestions on the categorization of documents put up on their official website as :

  1. Full access documents which can be viewed and downloaded by the general public.
  2. Documents with description but viewing and downloading restricted.

Several confidential, personal and exclusive information was being put up via documents that needed to be protected and access to them had to be duly regulated. Hence the proposal.

 

NOTABLE CASE LAWS

Some of the noteworthy trademark cases for the year 2019 would be:

1.      Crocs Inc Usa v. Bata India Ltd & Ors[3]

The plaintiff (Crocs) after an unsuccessful attempt in the lower court to sue the Defendant (Bata) for design infringement, approached the Delhi High Court pressing for an injunction on the ground of passing-off action under common law. The High Court considered the legislative intent of the Design Act of providing monopoly over the design vide registration only for a limited period, thereby making it available for public use after the tenure of the registered design. This objective would be lost if the design was allowed to be used as a trademark since the exclusive rights would then last till perpetuity. However, the court clarified that if there was an additional feature that had been extensively used as a trademark other than what has been protected as design, and goodwill had accrued in relation to the use of such feature as a trademark, it is only those features which could be protected as a trademark.

2.      Amway India Enterprises Pvt. Ltd. v. 1MG Technologies Pvt. Ltd. & Anr.[4]

In another important case, the plaintiff (Amway) sought a mandatory and perpetual injunction restraining the defendant from using the plaintiff’s trademark and selling products online without the plaintiff’s consent. The Delhi High Court restrained e-commerce platforms from selling products falling under the direct selling category without the consent of the proprietor of the registered trademark. The court held such an act enabling the sale of the product on the defendant’s website as not only infringement of the plaintiff’s trademark leading to dilution, passing-off and misrepresentation but also ultra vires the “direct selling guidelines 2016”. The court further observed that the intermediaries (e-commerce marketplace) should fulfil the due diligence requirements in order to avail the safe harbour protection.

  1. Amrish Agarwal v/s Venus Home Appliances Pvt Ltd[5]

It was ruled that in cases alleging trademark infringement, a legal proceedings certificate (LPC) ought to be mandatorily filed along with the plaint. In the said case, the LPC was filed at the stage of final arguments. It was objected on the ground that LPC filed in the last leg of the case ought to be disallowed. The said objection was counter-argued stating that a renewal certificate was brought on record and duly exhibited. In this regard, the Court held that in a trademark infringement case, the Court must be able to see the mark, and therefore an LPC or the certificate of registration along with the journal extract ought to be submitted at the initial stage itself.

 

The increased trademark filing activity illustrates an increased awareness among emerging entities regarding their intellectual property rights and the necessity to protect them as early as possible. With increased competition, the availment of trademark registration is also becoming a tough nut to crack. Further, the fluid nature of the digital environment poses a continuous challenge to the IP domain. Conducive policy changes and judicial decisions in the past year have dealt with some of these threats but for adequately serving the public interest implementation challenges have to be appropriately addressed

 

References 

[1] Available at https://dipp.gov.in/sites/default/files/DraftNational_e-commerce_Policy_23February2019.pdf

[2] http://ipindia.nic.in/writereaddata/Portal/Images/pdf/Catergorization_of_Docs.pdf

[3]CS(COMM) 569/2017

[4] CS (OS) 410/2018, 453/2018, 480/2018, 531/2018, 550/2018, 75/2019 & 91/2019

[5] CM (M) 1059/2018

 

 

Image Credits: Lukas Blazek on Unsplash 

Conducive policy changes and judicial decisions in the past year have dealt with some of the threats but for adequately serving the public interest implementation challenges have to be appropriately addressed.

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Liabilities of Intermediaries In Trademark Infringement Cases In India

The boon and bane of market vis-à-vis consumers has further intensified with the shift of the current generation to e-commerce. The boon has been the ease, economy, and the time efficiency that online trade offers while the bane has been the easy trafficking of counterfeits and threat to customer data. Although efforts are being made by the government to address the issues from a consumer/buyer point of view, not much has been done from a business/seller point of view. One worrying concern for businesses is the constant infringement of their trademarks which is suffering in the lack of necessary legislation or a decisive judicial pronouncement. Most businesses believe that intermediaries must be liable for allowing infringers sell goods on their platform without adequate due diligence, however, liability has not been conclusively attributed in this regard yet.

One prominent case that addressed the liability of online marketplaces in trademark infringement was Christian Louboutin SAS vs Nakul Bajaj & Others[i] decided on 2nd November 2018 by the Hon’ble Delhi High Court. But before we delve into the particular case or understand the liability of intermediaries, let us first understand who falls within the ambit of intermediaries and when is an intermediary exempted from liability.

 

Definition of Intermediaries

 

The term “intermediaries” is defined under section 2(w) of Information Technology Act, 2000 which says

 “Intermediary” – with respect to any particular electronic records, means 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.

 

Exemption from the liability/ Safe Harbour Provision

 

Section 79 of the Information Technology Act provides certain immunities to the intermediaries. That the intermediary shall not be liable for any third-party information, data or communication link made available or hosted by him. Section 79 of the Information Technology Act, 2000 is extracted below:

  • Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-sections (2) and (3), an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him.

 

  • The provisions of sub-section (1) shall apply if– (a) the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted; or (b) the intermediary does not– (i) initiate the transmission, (ii) select the receiver of the transmission, and (iii) select or modify the information contained in the transmission; (c) the intermediary observes due diligence while discharging his duties under this Act and also observes such other guidelines as the Central Government may prescribe in this behalf.

 

  • The provisions of sub-section (1) shall not apply if– (a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or otherwise in the commission of the unlawful act; (b) upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner.

Section 79 of the Act elaborates on the exemption from liabilities of intermediaries and Section 79(2)(c) mentions that intermediaries must observe due diligence while discharging their duties and observe such other guidelines as prescribed by the Central Government. Accordingly, Information Technology (Intermediary Guidelines) Rules, 2011 were notified on 11th April 2011.

Though the Indian Courts have reviewed Section 79 of IT Act, 2000 (Safe Harbour Provisions) on various facts and situation including in the cases of protecting online free speech (Shreya Singhal V. Union of India[ii]), uploading content and copyright violations (My Space Inc Vs. Super Cassettes Industries Limited[iii]) and design infringement (Kent Ro Systems Limited & Anr Vs. Amit Kotak and Ors[iv])etc, the position that is considered by Indian courts on violation of trademarks rights by e-commerce platforms and the extent of protection awarded to them was unclear till recent past.  

The landmark judgment passed by the Hon’ble Delhi Court in Christian Louboutin SAS vs Nakul Bajaj & Others tried to establish the liability of intermediaries on trademark infringement cases and the same is discussed below:

 

Christian Louboutin SAS vs Nakul Bajaj & Others

 

The Plaintiffs (Christian Louboutin), manufacturer of luxury shoes well known for their red soles filed a trademark infringement suit against an e-commerce website www.darveys.com (Defendants). The Plaintiffs had also obtained trademark registration for the word mark, device mark CHRISTIAN LOUBOUTIN and also for their red sole mark in India. The Plaintiffs claimed that their products were sold only through an authorized network of exclusive distributors.

The Defendants were selling various luxury products on their website including the Plaintiff’s products by claiming that they were 100% authentic. The Plaintiffs alleged that apart from selling and offering counterfeit products on the Defendants website, the image of the founder of the Plaintiff and the names Christian and Louboutin were used as meta tags. Further, the Defendants’ website gave an impression that it was in some manner sponsored, affiliated and approved for sale of variety of luxury products bearing the mark Christian Louboutin and this resulted in infringement of trademark rights and violation of personality rights of Mr. Christian Louboutin.

On perusal of the pleadings the Hon’ble Court observed that no factual issues arose in the determination of the case as the Defendants had not disputed the proprietary rights of the Plaintiff over their brand Christian Louboutin. The only defence put forth by the Defendants was the safe harbour provision under Section 79 of the Information Technology Act, 2000 that they were mere intermediary who enabled booking of products from any of the 287 boutiques/sellers across the globe using their online platform.  The Defendants contended that the products sold through their website was genuine, however, they were not providing after sales warranty or services.

The only aspect to be decided was whether the Defendants’ use of the Plaintiffs’ mark, logo was justified under Section 79 of the Information Act, 2000 or not.

The Hon’ble court perused the Defendants’ website and observed that customers were required to pay a membership fee in order to shop from the Defendants’ website and the said website also provided an authenticity guarantee to return twice the money if the products turned out to be fake or not of expected quality. Furthermore, in the terms and conditions, the Defendants claimed that they facilitated the purchase of original products and the prices of the products were maintained and changed at the discretion of the Defendants. Quality checks of the products were carried out by a third-party team who examined the precise details of the products that were shipped to the customers. The invoices generated were those of the website (defendant) company.  

In order to determine whether an online marketplace or e-commerce website is an intermediary, the Hon’ble Court elaborately examined the nature of services (provided a detailed list of 26 possible services that could be performed by intermediary) that would fall within the ambit of service contemplated in the definition of intermediary. Accordingly, entities that performed tasks such as identification of the seller, providing transport for seller, employing delivery personnel for delivering the product, accepting cash for sale etc and the measures taken by the online platforms  to ensure that unlawful acts were not committed by the sellers were taken into consideration for determining the role of the online marketplace. Considering the services played by the Defendant in the case, the Hon’ble Court was convinced that the Defendant exercised complete control over their sale of products and they were much more than just an intermediary.

The Hon’ble Court further noted that the e-commerce website and online marketplaces were required to operate with caution if they wished to enjoy the immunity provided to the intermediaries under Section 79 of the IT Act. When an e-commerce website is involved in or conducts its business in such a manner which would see presence of large number of elements (services and measures taken by sellers referred above), it could cross the line from being an intermediary to active participant. In such cases, online marketplace could be liable for infringement in view of its active participation.  The conduct of intermediaries in failing to observe due diligence with respect to IPR could amount to conspiring or abetting, aiding or inducing unlawful conduct and may lose the exemption to which intermediaries are entitled. When an e-commerce company claims exemption under Section 79 of IT Act, it ought to ensure that it does not have active participation in the selling process. The presence of any elements which indicates active participation could deprive intermediaries of the exception.

Finally, the Hon’ble Court ascertained whether there was any falsification of Plaintiff’s trademark under Section 2(2)(c), 101 and 102 of the Trademarks Act, 1999.  These provisions were being looked at to ascertain what constituted conspiring, abetting, aiding, or inducing, the commission of an unlawful act, in the context of trademarks rights. The Hon’ble Court concluded that the use of Plaintiffs’ mark in respect of genuine goods would not be infringement and in respect of counterfeit goods, it could constitute infringement. Thus, any online marketplace or e-commerce website which allows storing of counterfeit goods would be falsifying the mark.

In view of the above, the Hon’ble Court noted that the Defendant was not entitled to protection under Section 79 of the Information Technology Act. Further, the use of the Plaintiffs’ mark, the name and photograph of the founder without permission and the sale of products without ensuring genuineness constituted violation of the Plaintiffs rights. Pertaining to the contention of meta tagging, the Court held that Defendants’ use of the meta tagging would constitute infringement as upheld by the Delhi Court in another case (Kapil Wadhawa v. Samsung Electronics[v]).

In the above circumstance, the suit was decreed directing the Defendant to disclose the details of all its sellers, their addressee, contact details on the website, and prior to uploading a product bearing Plaintiffs’ mark, Defendant was required to obtain concurrence before offering for sale on its platform.

It is apparent that the legislative intent is to protect genuine intermediaries and it cannot be extended to those persons who are not intermediaries and are an active participants in the unlawful act.

 

Post Louboutin Case

 

The test laid down in Christian Louboutin case containing the detailed list of 26 possible tasks/services that could be performed by intermediaries were applied to various other cases such as Loreal v. Brandworld and Another[vi] and in Skull Candy Inc v. Shri Shyam Telecom and Others[vii] to ascertain the liability of intermediaries in online marketplace or e-commerce website.  

In this regard, it is pertinent to note the case of Amway India Enterprises Private Limited v. 1Mg Technologies Private Limited and Another[viii] where a single bench of the Delhi High Court passed an order restraining numerous e-commerce platforms such as Amazon, flipkart, snapdeal etc from the sale of direct selling products without the consent of direct selling entities. This decision of the single bench was set aside by the Division bench of Delhi High Court on 31st January 2020 and with this again the position of law pertaining to the intermediary liabilities in trademark infringement cases remains unclear. However, it is observed from various intellectual property rights cases that courts have placed higher responsibility to take down the contents that infringes the IP rights and is titling towards making these e-commerce platforms more responsible for their content.

Now that the Information Technology (Intermediary Guidelines Amendment) Rules, 2018 framed to make social media platforms accountable for their contents is on the verge of being notified, it is apparent that internet intermediaries won’t be able to  take shelter under the safe harbour protection of the IT Act, 2000 effortlessly.  The new rules intend to tighten the noose by filtering out information that threaten public health or safety. The rules make it mandatory for intermediaries to provide information or assistance to government agencies within 72 hours of formal communication,  enable tracing out of originator of information on its platform by deploying technology based automated tools for proactively identifying and removing or disabling public access to unlawful information and by removing access to unlawful content within 24 hours upon receiving a court order or being notified. It also requires intermediaries to incorporate a company if they have more than 5 lakh users in India and to have a permanent registered office in India as well as appoint a nodal person for contact with law enforcement.  

From an IP perspective, the roles and responsibilities of intermediaries are likely to become more crucial in IPR infringement cases. The safe harbour protection must be granted to intermediaries only if they play the role of a facilitator.  Since e-commerce has flourished like a green bay tree in the massive Indian market, the government is mooting the idea of having a separate regulatory body and a separate e-commerce law that provides for periodic audit, storage of data,  consumer protection,  export promotion and other provisions for promotion of e-commerce. The new law supposedly proposes to impose joint liability for counterfeit products on e-commerce entity as well as sellers. If approved, this would substantially address the trademark concerns and ensure fair competition.

 

 

References

[i] CS (COMM) 344/2018, I.As. 19124/2014, 20912/2014, 23749/2014 & 9106/2015

[ii] AIR 2015 SC 1523

[iii] 236 (2017) DLT 478

[iv] 2017 (69) PTC 551 (DEL)

[v] FAO(OS) 93/2012

[vi] CS(COMM) 980/2016 & I.A. 24186/2014

[vii] CS(COMM) 979/2016 & I.A. 24578/2014

[viii] CS (OS) 410/2018

 

Image Credits: Photo by Mark König on Unsplash

From an IP perspective, the roles and responsibilities of intermediaries are likely to become more crucial in IPR infringement cases. The safe harbour protection must be granted to intermediaries only if they play the role of a facilitator.  Since e-commerce has flourished like a green bay tree in the massive Indian market, the government is mooting the idea of having a separate regulatory body and a separate e-commerce law that provides for periodic audit, storage of data,  consumer protection,  export promotion, and other provisions for promotion of e-commerce.

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