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The Indian Fashion Market is booming across continents. At the heart of fashion are designs, innovation and unique trends. Fashion is not only restricted to apparels but also extends largely to luxurious goods and products. Each year the fashion hub produces a whole new collection of designs which needs to be protected and regulated by a proper forum of law. Through IPR protection is guaranteed to the maker against its use, aesthetic aspects and product features or a print.

Trademark

It is that branch of IPR which ensures an identity in the form of a logo, work or any mark in order to indicate a product and distinguish the same from its competitors. The use of trade mark law ranges from not only the protection of logos and brand names, but also other distinct features of a product. Trademarks can also be either inside the garment or subtly displayed on small portions such as buttons. Trademark law has also led to the introduction of trade dress i.e. the total image of the product including as size, shape, color or color combinations, texture, graphics or even particular sales techniques.

Examples:

Burberry holds trade mark rights in both the trade mark “Burberry” and the Burberry check pattern.

Louis Vuitton uses its ‘LV’ mark which is a logo as a part of the design.

Pickwick sells a range of casual fashion wear to adolescents across Europe. Its trademark depicts a young, faceless boy with a spiky hairstyle.This was selected as the style was very appealing to teenagers. Thereafter, Teenagers began perceiving the Pickwick logo as trendy and are willing to pay extra for clothes bearing its trademark.

Copyright

It is that branch of IPR which guarantees protection for literary and artistic work although already published and put to use. It can be sought under the Copyright Act, 1957 in India for a period of lifetime of the artist and an additional 60 years after he passes away. It plays a major role in motivating a creator and thereby ensuring that the illegal use of his creativity or skill is not obtained.

Trade Secrets

 It refers to the core concepts by the use of software tools for fashion design, computer-implemented, software-based business models and logistics management of the entire value chain. Through the protection of information by IP a business concerns can aim at a well-established market position and regulate its market share, profit margins, differentiation, innovation thus avoiding the risk of IP infringement. IP protection of assets creates an overall image in the eyes of the investor and consumer.

Examples:

 An innovate information technology system has been opted for by Zara in order to shorten its production cycle to a mere 30 days while that of its competitors range from 4 to 12 months. Also, a high-tech distribution system, with some 200 kilometers of underground traces and over 400 chutes, ensures that the finished items are shipped and arrive in stores within 48 hours.

Shirtsdotnet is a clothing platform that offers customers an option to design and order apparel directly from its virtual shop. A proprietary software which is protected as a trade secret has been adopted to provide mass customization clothing solutions.

Patents

Any new invention, innovation in terms of a technical aspect, fabric or any material, design calls for patent protection. The Danish biotech company, Novozymes has developed an enzyme and microorganisms named cellulose for the protection of fabrics. This removes some of the indigo dye from the denim in order to provide a worn look. This has now been listed worldwide for the improvement of production methods.

Another inventive fabric is the Suberis by the Italian Company GrindiSrl. It is considered to be smooth as velvet, light as silk, washable, waterproof, stain-resistant and fireproof. This is majorly used in the manufacture of clothing, footwear and sportswear, as well as in many other applications.

Conclusion

Registration enables the inventors of fashion to prevent the misuse or exploitation of the original ideas or aspects or any articles. A vast amount of investment is made in designs and trends which is then shared into the public domain to increase its popularity and expand business operations. Countries such as UK and European Union account for a Design Act for ensuring protection for unregistered designs. India offers mandatory protection under Design Act.

Although the process of registration is expensive and weighty, the practice of registration needs to be adopted so as to restrain unscrupulous competitors from copying some of the most innovative creations and ensure guarantee in the futuristic aspect. Therefore, the generation of an idea marks the advent of a unique feature but that needs to be protected by IP to prevent its plagiarism.

 

Author: Sayali Diwadkar, 2nd year BBA LLB Symbiosis Law School, Hyderabad, Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

References:

[1] https://www.iipta.com/new-trend-season-role-ip-fashion-industry/

[2] http://www.wipo.int/wipo_magazine/en/2005/03/article_0009.html

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Much like the trends on a ramp evolve every season, in the same way legal strategies of the industry’s leading fashion brands, fashion-houses and designers are in flux. Fashion is something to which each one of us relates. It is a part of everyone’s daily life; be it in the form of apparels or shoes we wear or a new hairstyle we adorn or the exotic jewelry we flash.  Fashion industry is one of the most popular and profit-making industry in any country and yet is also one of the most vulnerable. The vulnerability of fashion emerges from the lack of protection to original ideas and works in terms of Intellectual Property. As a result, many fashion houses are often seen suing for the infringement of their designs. This article depicts the tendencies witnessed in affording IP protection to fashion while focusing upon the recent case of Burberry v. Target.

The War of Brands

On 2nd May 2018, one of America’s largest big-box retailers Target was slapped with an 8 million dollar trademark infringement and counterfeiting lawsuit that a British luxury brand Burberry filed in a New York Federal Court. The allegations against Target are that, it has been selling products having ‘blatant reproductions’ and bearing unauthorized copies of Burberry’s world famous ‘checks’ trademark. The infringement is alleged to be of continuing nature as Target has been involved in the act for over a year and continues to do so despite of numerous cease and desist letters being sent. Target was selling products including eye wear, water bottles and luggage, since early last year, bearing the trademarked pattern of the plaintiff. Burberry sent the retail giant a cease and desist letter alerting them about Burberry’s exclusive rights in said check pattern. A few months after receiving this letter, Target, being explicitly aware of Burberry’s special rights chose to ignore them and began offering a number of scarves on sale, all of which bore Burberry’s legally protected trademark. Burberry claims that Target purposely intended to continue selling infringing merchandise even after receiving the cease and desist letter which demonstrates the ill-intention on part of Target and its utter disregard to the intellectual property rights of Burberry. The motive behind Target’s actions in selling infringed merchandise was to misappropriate the colossal goodwill of Burberry and therefore be unjustly enriched from the enormous profits earned. The design in question is produced below for convenience:                     

Although the scarves produced by Target are of inferior quality yet they are on the surface indistinguishable from the genuine Burberry scarves. The items sold by Target were not approved by Burberry and such a reproduction of the check print of Target’s items could cause confusion in the minds of the consumers and would lead them to believe that those items are sponsored by Burberry. Burberry claims that Target’s history of collaborating with popular brands and fashion designers to promote and sell Target’s exclusive products further enlarges the scope of consumer confusion. It is stated that the classic cashmere scarf of Burberry sells for $430 which Target is selling for $12.99 (Check it out here Target and here Burberry).

Burberry is seeking $2 million for every instance of infringement along with damages to the full extent possible.

Analysis

The first and the most quintessential question which arises here relates to the scope of IP protection in the fashion industry. Fashion brands are not immune to counterfeiting. It is easier for the counterfeiters to copy fashion products and clothing because they are relatively simpler to manufacture as compared to the hi-tech devices. Also, they can be sold with a high mark-up owing to the reputation or goodwill associated with a well-known brand. With the increasing awareness of intellectual property in the fashion world more and more stake-holders are seeking trademarks and other IP protections for their creations. According to the Trademark Industry Report 2017 prepared by Trademark Now, Clothing, Apparel and Luxury Goods industries were under Trademark Spotlight in 2016 with more than 6400 applications being filed around the globe.    In order to avoid the menace of counterfeiting, where the counterfeit product incorporates a well-known brand name, trademark enforcement is the best and most effective tool. Fashion brands register their house brand name and key sub-brands.  Some of the leading luxury brands have been vigilant to safeguard their shape, color, patterns, cuts, style etc. For example, Christian Louboutin has trademarked red soles of their shoes. He has also sued Zara for infringement.

Indian Perspective

Fashion industry is one of the fastest growing industries in India especially after some Indian designers have earned respect and recognition of other nations.  However, the growing fame comes with certain vulnerability erupting from the scope of infringement by other domestic or even international designers. Fashion fraternity of India is slowly getting the hang of intellectual property protection for their creation.  In comparison to other countries especially USA, France, Spain and London, India is lagging behind in granting protection to fashion designers. Many designers are still unaware of their IP rights to guard their brands and creations from reproductions, printing, publishing, distribution of prints that are colorable imitations etc.

Conclusion

With the growing awareness of importance of IP in the fashion world, there is a serious need to re-evaluate the spectrum of protection that is granted to the fashion industry. Fashion designers should go forward and enhance their knowledge of Intellectual Property Rights and should try to find out most suitable safeguard for their products. The Burberry case is the classic example of how far the fashion industry has come with respect to recognizing their rights and enforcing them at all costs and at all levels. It would be interesting to find out the outcome of this case as it could be a game-changer in the fashion-industry.

Author: Pratistha Sinha, Associate at  Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com

References:

[1] Burberry Limited (UK) et al v. Target Corporation et al, 1:2018-cv-03946 (SDNY)

[2]http://www.thefashionlaw.com/home/burberry-slaps-target-with-multi-million-dollar-counterfeiting-lawsuit

[3]http://www.worldtrademarkreview.com/blog/detail.aspx?g=7fe051f2-eba0-423c-b1b0-ef80109587f3

[4]http://www.fortune.com/2018/05/11/burberry-suing-target-trademark-infringement-check-print/

[5]https://www.iipta.com/ip-assets-fashion-industry/

[6]http://www.thefashionlaw.com/home/the-state-of-trademark-protection-in-fashion-and-luxury

[7]https://www.trademarknow.com/trademark-industry-report

[8]http://www.worldtrademarkreview.com/Intelligence/Anti-counterfeiting/2015/Industry-insight/IP-enforcement-in-the-fashion-industry

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Monsanto Technology LLC, one of the world’s leading seed company, was smacked by the decision upheld by the Division bench of Delhi High Court in an appeal that was preferred by them against the order of Delhi High Court single bench.

The dispute initially arose over license and royalty of Patented seed technology–BOLLGARD II, between Monsanto and Nuziveedu seeds Company in 2015 (which has earlier been discussed here),  which stretched to a major debate over the legality of Patent No. 214436 consisting of  Bt. Technology  that was granted to Monsanto.

The disputed Patent No. 214436 is titled as “METHODS FOR TRANSFORMING PLANTS TO EXPRESS BACILLUS THURINGIENSIS DELTAENDOTOXINS”  which was questioned on claims 25-27 that contains biotechnological invention containing the infusion of Bt gene into the cotton genome. This Bt. bacterium eradicates pests afflicting the cotton plant.

Nuziveedu’s Claim

Nuziveedu filed a counter claim under section 64, relying on various grounds such as  absence of novelty[1], absence of obviousness[2], complete specification not revealing any “invention”[3],deficiency in complete specifications[4] and claim[5], false suggestions or representations[6], non-compliance of the requirements of Section 8[7],non-disclosure of source or geographical origin[8]and the invention claimed in the complete specification being not useful[9]. Apart from the above grounds, Nuziveedu focused on Section 3 (j) of the Patent Act, 1970, which served as the main ground for the revocation of the mentioned Patent.

Arguments

  1. Interpretation of Section 3(j) of Patent Act,1970 vis-a-vis Patent No. 214436

Nuziveedu contended that Section 3(j)  clearly explains as to what are not an ‘inventions’, i.e. “plants and animals in whole, or any part, thereof, other than microorganisms, but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals.” Thus, Nuziveedu asserted that claim 25 of the Patent relates to ‘nucleic acid sequence’, application of which  is only in terms of “a plant cell, a seed, a transgenic plant “or a plant variety”. Thus, the specification does not provide any industrial application. Since, a plant or seed, which has such a nucleic acid sequence containing the Cry2Ab gene, cannot be granted a patent in India as this (claim 25) falls squarely within Section 3(j) of the Act.” Further, Nuziveedu contended that Bt. Trait in Cotton Hybrid varietal plants is an essential biological process, and did not regard cross-bred plants and animals as patentable because they are better regarded as ―discoveries[10] which happens naturally and therefore, its just a discovery which has taken place in a laboratory.

Monsanto interpreted the term ‘Plant’ under section 3(j) as a “living organism” and further averred that exclusion would apply to biological entities, per se and not to inventions, which properly fit the description of “micro-organisms” that are excluded specifically from the mischief of the provision. It explained that “DNA” is the “substance responsible for all the processes within a living organism”  and a ‘gene’ is merely a code which is used for production of a protein in a living organism, thus it is not a living thing. Therefore, the subject matter of the patent (Claim Nos. 25-27) are manmade DNA sequences comprising the CryAb gene which confers insect resistance to plants, when incorporated into the plant’s genome. They emphasized that no part of the DNA sequence is a living organism and thus DNA cannot be called as “part” of a plant as well, because it is not like an organ of an animal or the physical attribute of a plant, like flower, fruit, etc.  This is a method of creating transgenic varieties and micro-organisms that are new and inventive transgenes and therefore, very much a Patentable subject matter under the Patents Act.

  1. Applicability of Plant Variety Act

Since ‘Micro-organism’ has not been defined by Plant Variety Act, Nuziveedu provided a Cambridge Dictionary definition of ‘Micro-organism’ as “A living thing that on its own is too small to be seen without a microscope, such as bacteria, germs, viruses. Thus, negated Monsanto’s contention that their Patent claim is inanimate and Patentable. Nuziveedu, emphasized on the history of India’s ratification to the TRIPS Agreement, as consequences to which Plant Variety Act was enacted with the objective to protect plant varieties and, the rights of the breeders and also to encourage the development of new varieties of plants. Nuziveedu contended that since the questioned Patent comes under the definition of micro-scopic living entity and a part of plant variety , thus it should   rather be protected by under the Plant Variety Act instead of Patent Act.

However, Monsanto rebutted the contentions of Nuziveedu by averring that the patented ‘trait’ or DNA is beyond the scope of the expression “plant variety” as defined as ‘plant variety’ with a commentary note which comprehensibly excludes ‘such a plant or part(s) of the plant could be used to propagate the variety) , a trait (e.g. disease resistance, flower color),  a chemical or other substance (e.g. oil, DNA),  a plant breeding technology (e.g. tissue culture)” by International Convention for the Protection of New Varieties of Plants (UPOV Convention 1991). Further, Monsanto elaborately mentioned the history of the Patent amendments in order to explain that through various amendments of the concerned Act in 2002 and 2005, and on observing section 3(j) and section 2(1) (j) read with the objects and reasons of the amendments:

“4. some of the salient features of the Bill are as under :

(a). …

(b). to modify section 3 of the present Act to include exclusions permitted by TRIPS Agreement and also subject matters like discovery of any living or non-living substances occurring in nature in the list of exclusions which in general do not constitute patentable invention.”

So it is very clear that the patentee is entitled to Patent protection for the invention resulting from innovations and skill and the subject claims being products or processes of biotechnology. They also observed that when the patented invention is injected into the cotton seeds which provides a hybrid variety, then that hybrid variety can be protected under Plant Variety Act and the invention will be protected under Patent Act.

  1. Trade Mark Violation and Sub-Licensing issue:-

Monsanto alleged that termination of Sub- Licensing was perfectly legal as Nuziveedu failed to provide the required trait value to Monsanto for using their technology. As a matter of right, they could injunct Nuziveedu from using their Patented technology and abbreviation of their trademarks BG I and BG II. Further, once the agreement has been terminated it cannot be restored and the parties cannot be directed to perform the obligations contained therein as per Section 14(1) of the Specific Relief Act, 1963.[11]

However, Nuziveedu claimed that by virtue of  seeds included under the Essential commodity Act, 1955, the Central Government is empowered to fix the trait value of the seeds, exceeding which, one cannot terminate the agreement on the grounds of non-payment of licensee fee. Nuziveedu rebutted the reliance taken by Monsanto under section 42 of specific Relief Act, by asserting that it cannot be bound by those obligations (trait fees) fixed by Monsanto, to which only the Central Government is empowered to fix. Thus, relief under the mentioned provision apropos the present case negated. Furthermore, based on this contention questioned the validity of such termination of sub-licensing agreement, terming it as an arbitrary action taken by Monsanto.

In addition to this, Nuziveedu also averred that such technology is only capable to be protected under Plant Variety Act, which Monsanto neglected, thereby avoiding the provision of Benefit sharing[12] arrangements with the seed companies who developed new Bt. Cotton plant varieties expressing Bt trait (subject Patented).

However, in order to rebut the above-stated contentions, Monsanto referred to the judgment of Percy Schmeiser case[13], where “purposive construction‟ was applied to the similar facts and it was held that Monsanto’s gene patent was infringed by “use”, when an unauthorized person developed and commercialized seeds containing the patented gene, since the gene was present throughout the seed, conferring the advantageous trait to the plant and this amounted to taking advantage of the technical contribution of the patentee. Similarly, Nuziveedu has also taken full advantage of the functionality of insect tolerance arising solely from the use of the patented DNA sequences in their cotton hybrid, thereby infringing their subject Patent. Thus, Nuziveedu is infringing Monsanto’s Patent, as it is using their invention to bring out the ultimate product.

With respect to the, Trademark violation by Nuziveedu, it is claimed by the alleged party that they did not intend to use the mark on their product and have just used the abbreviations of Monsanto’s Trade mark, only with the intention of indicating the source which has been used in manufacturing the product, which is legitimate as being a descriptive mark under section 35 of the Trade marks Act, 1999. Moreover, infringement of Trade mark can occur only if a registered mark is used as ‘Trademark’ and not otherwise.[14]

The Delhi High Court Decision

The division bench of Delhi High Court analyzed contentions of both the parties, it upheld Nuziveedu’s Contention and observed that protection under Plant Variety Act and Patent Act are not complimentary but are exclusive of each other and Monsanto Patent protection was incorrect as it should have been protected under the Plants Variety Act, looking at the nature of invention.

On account of the above reasons and by observing that Monsanto had failed to disclose the details as well as source  of its invention as per section 10(4) of the Act and  the Court held that the subject patent falls comes under the ambit of Section 3 (j) of the Patents Act i.e. the said inventions are not patentable. Therefore, Counter claim filed by Nuziveedu is consequently allowed. The Court further gives Monsanto, an opportunity to restore its right in there subject Patent, by allowing them to seek for registration of the same within three month  from the date of this judgment, i.e. 11.07.208.

With regard to Trade mark infringement, the Court observed that the defendants do not have any malafide  intention  to use the Plaintiff’s marks “BOLLGARD” or “BOLLGARD-II”,  rather, Nuziveedu is only using the abbreviation of  the name which is permitted under section 2 (o) of Trademarks Act.

Further, the Court directed Monsanto to continue with its obligations under the sub-license agreements and allowed “the suit to proceed with respect to the claim for damages and other reliefs”, in the light of the sub-license termination notices issued by Monsanto. The Court also provided a period of three months to Monsanto to seek protection of their subject Patent

Analysis

The whole case revolved around the very major issue, that is whether the Patent No. 214436 has been erroneously granted Patent under the Indian Patent Laws. The Court Observed an important aspect of Intellectual Property Laws, that Patent Act are not complimentary but are exclusive of Plant Variety Act and thus, Monsanto Patent protection was incorrect as it should have been protected under the Plants Variety Act, going by a literal interpretation of provisions of both the statutes.

However, such kind of practice and the current position of law as laid down by Justice  Mr. Justice S. Ravindra Bhat and  Mr. justice Yogesh Khanna, may create a future barrier for entrance of new technologies in the Agricultural Industries as the major incentive for the technology developers have been sacked and also now that the technology developers have lost the right to fix the license price to the Central Government. I feel that with an advanced inventions along with growing technology and need of such development, the statute must be flexible enough to imbibe the new changes and pave way for such technological developers subject to public policy and can be regulated by the Central Government with respect to the kind of invention taking place as well as ‘benefit sharing aspect and license fee’, hence taking care of farmer’s right as well. Therefore,  the subject Patent may be validated and the outcome product after being processed by the Patented invention can be protected under Plant Variety Act. Thereby, avoiding the overlap of IP laws and rightfully protecting each party’s right.

Monsanto, being the world’s biggest agricultural company also may prefer a special Leave Petition for the above placed decision. Let’s wait and watch what’s in store for the company and Nuziveedu has been lucky so far having the laws of the land by its side. If Monsanto appeals against the judgment, which is more probable to happen then The question on  3(j) would definitely arise as to its need, intention and validity in the contemporary world having advanced technological inventions, ideas and its needs.

Author: Pratistha Sinha, Associate at  Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at pratistha@iiprd.com

References:

[1] Section 64 (1)(e), The Patents Act, 1970

[2] Section 64 (1)(f), The Patents Act, 1970

[3] Section 64 (1)(d), The Patents Act, 1970

[4] Section 64 (1)(h),The Patents Act, 1970

[5] Section 64 (1)(i), The Patents Act, 1970

[6] Section 64 (1)(j), The Patents Act, 1970

[7] Section 64 (1)(m), The Patents Act, 1970

[8] Section 64 (1)(b), The Patents Act, 1970

[9] Section 64 (1)(g), The Patents Act, 1970

[10] Harvard College v Canada (Commissioner of Patents),[ 2002] 4 SCR 45

[11]Indian Oil Corporation Ltd. v. Amritsar Gas Services and Ors., (1991) 1 SCC 533

[12] Section 26, Plant Variety Act

[13]Percy Schmeiser v Monsanto 2004 1 SCR 902

[14] Section 29, Trade Marks Act,1999

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There is always a concern while filing a suit as to whether all the parties concerned have been taken into account or not. Further, if any party is missed, can that party be joined in a suit at a later point of time is another issue to be pondered upon. Fortunately, Code of Civil Procedure, 1908 comes to our rescue in order to provide a remedy for the same.Though the joinder of parties rests upon the discretion of court, Order 1 Rule 1 or Order 1 Rule 3, as the case may be, of Code of Civil Procedure, 1908[1] is to be read together with Order 2 Rule 3 and Order 2 Rule 6.

Order I Rule 1 of Code of Civil Procedure, 1908 states that:

“1. Who may be joined as plaintiffs

All persons may be joined in one suit as plaintiffs where—

(a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist in such persons, whether jointly, severally or in the alternative; and

(b) if such persons brought separate suits, any common question of law or fact would arise.”[2]

The provision clearly mentions two grounds upon which a party may be joined in a suit at a later point of time as well. First, the party must have a right to claim a relief, either arising out of the same act or same transaction or arising out of a series of acts or transactions upon which the suit rests. Second, if a separate suit is filed, there would exist a common question of law or fact. It should also be read that the two conditions must be read together and not in priority of the first over the second.

This provision of the Code has been elaborately explained by the Indian Courts in various landmark judgments. One of the earlier judgments in this regard came even before independence in the year 1935 from Calcutta High Court in the seminal case of HaruBepari and Ors. vs. Roy KshitishBhusan Roy Bahadur and Ors. (21.05.1935)[3], where under Justice Khundkar and Chief Justice Henderson, it was held that, ““The conditions which rendered the joinder of several plaintiffs permissible under Order I, Rule 1. C. P. C. do not necessarily imply that there can be only one cause of action in the suit in which the several plaintiffs join”[4]

This was followed by Guwahati High Court judgment delivered in the year 1956 in the remarkable case of of SitaramAgarwallavs.Rajendra Chandra Pal where the Court made an observation that, “It is not necessary that all questions arising in the case should be common to two suits if plaintiffs co – sharers had instituted separate suits. If even one question of law or fact common to both the suits could arise, there would be justification for joinder and the requirement of Rule 1 of Order 1 would be satisfied. The defence actually set up would have been raised in both the suits.”[5] and that “The joinder has caused no difficulty in the consideration of this plea and has not adversely affected the case of the defendant on the merits.”[6]

In the year 1964, another matter in Allahabad High Court came forward in this regard in the celebrated case of of ShambhooDayalvs. Chandra Kali Devi, where the Court made an observation that, “The law was changed after the decision in Salima Bibi v. Sheikh Muhammad (ILR 18 All 131)[7] and now it is possible for three plaintiffs to be joined in one suit even on the basis of different causes of action, provided any common question of law or fact would arise if the suit had been filed separately. The change in India was parallel to corresponding changes in English procedure and a joinder of plaintiffs on the same principle is permitted by the English and Indian Courts today.”[8]

Further, in a subsequent Bombay High Court judgement delivered in the year 1972, in the landmark case of Krishna Laxman Yadav and Ors. vs. Narsinghrao Vithalrao Sonawane and Anr., in the Courtroom of JK.K. Desai and Chief Justice M.S. Vaidya, it was observed that, “The result of the provisions of Order 1, Rule 1 of the Civil Procedure Code is that where right to relief exists in favour of several plaintiffs as a result of the same transaction even if the right is several the plaintiffs would be entitled to join in the same suit for the several reliefs the only precondition being that common question of law or fact arose between the plaintiffs.”[9]

It was followed by the verdict delivered by Rajasthan High Court in the case of Hari Ram Fatan Das and Ors. vs. Kanhaiya Lal and Ors., where in the Court of Justice P.N. Singhal, it wasobserved that, “The relief which the -plaintiffs have claimed, jointly, against the defendants thus arises out of that basic fact, not only in regard to that part of the suit which relates to the recovery of the arrears of rent and damages, but also the other part relating to eviction from the suit premises. One essential requirement of Order 1. Rule 1. C. P. C. has therefore been fulfilled in this case. According to the other requirement of the rule joinder of plaintiffs would be permissible if it could be shown that “any common question of law or fact” would arise if they brought their suits separately. It is quite obvious in this case that the common questions of fact which would arise on the filing of separate suits would be those relating to the existence of the tenancy granted by Lal Mohammad and the nonpayment of rent by the defendants at the rate of Rs. 50/- per mensem. It is therefore clear that both the essential requirements of Order I. Rule 1, C. P. C. have been fulfilled and there is no reason why the four plaintiffs should not have join-ed in their suit against the defendants.”[10]

Later, another Bombay High Court judgment delivered in 1978 in the case of Paikanna Vithoba Mamidwar and Anr. vs. Laxminarayan Sukhdeo Dalya and Anr., where the Court opined that, “It is not, therefore, necessary any more that there must be identity of interest or identity of causes of action. What is necessary is the involvement of common question of law or fact.”[11]

An attempt has been made by the legislators, and in order to provide the defendants with equal footing, a similar provision has been provided for in Order 1, Rule 3 of Code of Civil Procedure, 1908 which reads as:

“3.  Who may be joined as defendants

All persons may be joined in one suit as defendants where—

(a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist against such persons, whether jointly, severally or in the alternative; and

(b) if separate suits were brought against such persons, any common question of law or fact would arise.”

It can be observed that the provision provided is more or less the same for both plaintiffs as well as defendants.

This was further clarified and explained by the Honourable Supreme Court in 1999 in the seminal case of Iswar Bhai C. Patel @ Bachu Bhai Patel vs.HariharBehera&Anr.(16.03.1999 – SC),where the Supreme Court observed that:“This Rule requires all persons to be joined as defendants in a suit against whom any right to relief exists provided that such right is based on the same act or transaction or series of acts or transactions against those persons whether jointly, severally or in the alternative. The additional factor is that if separate suits were brought against such persons, common questions of law or fact would arise. The purpose of the Rule is to avoid multiplicity of suits”[12] Further the Court observed that the two provisions, namely, Order 1 Rule 3 and Order 2 Rule 3 if read together indicate that the question of joinder of parties also involves the joinder of causes of action. The simple principle is that a person is made a party in a suit because there is a cause of action against him and when causes of action are joined, the parties are also joined.

On providing a harmonious construction to Order 1 Rule 1 or Order 1 Rule 3 separately with Order 2 Rule 3 the issue seems to be resolved. Order 2 Rule 3 of Code of Civil Procedure, 1908 which can be read as:

“3.   Joinder of causes of action.

(1)        Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiff’s having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit.

(2)        Where causes of action are united, the jurisdiction of the Court as regards the suit shall depend on the amount or value of the aggregate subject-matters at the date of instituting the suit.”

This clarifies that any party subject to the conditions provided can be joined in the suit if the Court deems fit. Order 2 Rule 3 was further explained by the Honourable Supreme Court in 2017 in the seminal case of Kazimunnisa (dead) by L.R. vs. Zakia Sultana (dead) by L.R. and Ors.), where it was held by the Supreme Court that, “This was an appropriate case where the provisions of Order II Rule 3 of the Code, which deals with joinder of causes of action, could have been resorted to by the Court suo – moto for clubbing the two cases as the facts involved in both the cases satisfied the attributes of Order II Rule 3 of the Code”[13]

This view was supported by numerous High Courts even before this landmark judgement. In Allahabad High Court in the year 1942 in the case of Karan Sinqh and others vs. LalaKunwar Sen and others, being one of the earlier verdicts delivered in this regard, Justice James Joseph Whittlesea Allsop observed that, “It is necessary that the right to relief should arise out of the same act or transaction or series of acts or transactions and this implies, in my judgment that the acts or transactions, where they are different, should be so connected as to constitute a single series which could fairly be described as one entity or fact which would constitute a cause of action against all the Defendants jointly. Whether this necessary condition exists in any particular case would, of course, depend upon the nature of the case but I am satisfied that this at least is necessary that the case should be such that it could be said that the Court in which the suit was instituted had local jurisdiction in the first instance to deal with the controversies arising between the Plaintiffs and each of the Defendants.”[14]

Further, Justice Sen of Calcutta High Court in the year 1950 in the seminal case of Shew Narayan Singh vs. Brahmanand Singh and Ors.observed that:

“Read in isolation Order 2, Rule 3 does not permit a suit of this description. The rule permits the joining of several causes of action in one suit against one defendant or one group of defendants jointly. It does not sanction a single suit when the cause of action against one defendant is different from the cause of action against another. But it has been held in numerous cases that Order 1, RULE 3 is not confined to joinder of parties only but that it also embraces joinder of causes of action against different parties. It has been further held that Order 2, Rule 3 must not be interpreted so as to override or render nugatory the provisions of Order 1, Rule 3.”[15]

And it was also observed:

“That although a suit as framed may not be in accordance with the provisions of Order 2, Rule 3, nevertheless, it would be maintainable if it complied with the provisions of Order 1, Rule 3 and for the purpose of showing that Order 1, Rule 3 deals not only with joinder of parties but also with joinder of causes of action. It is permissible to join different causes of action against different defendants in one suit so long as the stipulations set out in Order 1, Rule 3 are complied with.”[16]

Further the Court observed the intention behind consolidating various cases in   Chitivalasa Jute Mills Vs. Jaypee Rewa Cement[17] and was of the opinion that The Code of Civil Procedure does not specifically speak of consolidation of suits but the same can be done under the inherent powers of the Court flowing from Section 151 of the CPC. Unless specifically prohibited, the Civil Court has inherent power to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. Consolidation of suits is ordered for meeting the ends of justice as it saves the parties from multiplicity of proceedings, delay and expenses. The parties are relieved of the need of adducing the same or similar documentary and oral evidence twice over in the two suits at two different trials.

Thus, it can be observed that where the same cause of action arises from the acts of various Defendants, the Plaintiff can file a single suit against all the defendants. And the defendants may ask to be added as a party in a suit. In every case, the joinder of a party depends upon the satisfaction of the Court.

Author: Madhur Tulsiani, Intern at  Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

References:

[1]https://indiacode.nic.in/bitstream/123456789/2191/1/190805.pdf#search=Code

%20of%20Civil%20Procedure

[2] (ibid).

[3]HaruBepari and Ors. vs. Roy KshitishBhusan Roy Bahadur and Ors, (MANU / WB / 0046 / 1935).

[4](ibid).

[5]Sitaram Agarwalla v. Rajendra Chandra Pal AIR 1956 Gau 7

[6](supra).

[7]Sheikh Muhammad and Ors. vs. Salima Bibi and Ors. MANU/UP/0107/1895

[8]ShambhooDayal vs. Chandra Kali Devi, AIR 1964 All 350,( MANU/UP/0107/1964)

[9]Krishna Laxman Yadav and Ors. vs.NarsinghraoVithalraoSonawane and Anr., (MANU/MH/0123/1973)

[10] Hari Ram Fatan Das and Ors. vs. Kanhaiya Lal and Ors.,1974, (MANU/RH/0007/1975).

[11]PaikannaVithobaMamidwar and Anr. vs.LaxminarayanSukhdeoDalya and Anr.(MANU/MH/0061/1979)

[12]Iswar Bhai C. Patel @ Bachu Bhai Patel vs. HariharBehera&Anr. (MANU/SC/0173/1999)

[13]Kazimunnisa (dead) by L.R. vs. Zakia Sultana (dead) by L.R. and Ors., (MANU/SC/1426/2017)

[14] Karan Sinqh and others vs. LalaKunwar Sen and others, (MANU/UP/0176/1942)

[15]Shew Narayan Singh vs. Brahmanand Singh and Ors., (MANU/WB/0181/1950)

[16](supra).

[17]Chitivalasa Jute Mills vs. Jaypee Rewa Cement,(MANU/SC/0092/2004)

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With the evolution of Globalization and the increasing presence of multi-national corporations like Amazon and Apple Inc. amongst others, enforcing Global Intellectual Property (“IP”) Rights becomes indispensible. As a result of this, business owners need to be conscious of ways to ensure that their IP, especially trademarks is protected globally. In 2012, Apple faced an issue with its Trademark registrations due to Trademark Squatting and had to pay a hefty amount of  $60 million to the owner of the ‘iPad’ Trademark in China. A possible dispute of the same nature could arise in India with respect to Amazon. Amazon[1] has introduced Prime, Echo and Prime Music in India is not able to proceed further with the registration at the Indian trademark office. It has applied for these trademarks under class 9, which is primarily related to computers, software and electronics.

To provide a better understanding of the menace that Trademark Squatting is, The World Intellectual Property Organisation (“WIPO”) defines Trademark Piracy (Squatting) as “the registration or use of a generally well-known foreign trademark that is not registered in the country or is invalid as a result of non-use.”[2]. It occurs when a person in a foreign country registers a trademark that has already been registered by its true owner in its original country. There have been various instances of the same due to which the original companies are not able to register their trademarks and has to pay a very heavy price to such companies to stop the use of the trademarks.

Interestingly, trademark squatting is a niche area in trademark disputes. It has been seen that generally registration is a major roadblock for foreign companies as once they gain worldwide goodwill, a number of local infringers try to register their trademarks in order to sell their products and make huge profits. With respect to the general rule, the exclusive rights of a trademark owner is territorial in nature and therefore laws relating Trademark varies from one territory to another. Trademark squatters take advantage of such different law enforcement, which becomes a hurdle when companies become multi-nationals.

Trademark Squatting is largely seen in China.[3] It follows a ‘first to file’ system as opposed to the ‘first to use’ system. In a ‘first to use’ system the first user of the Trademark obtains the exclusive right, whereas, in a ‘first to file’ system, the first person registering it gets the right to the Trademark. Thus, the country doesn’t require any proof of actual use or intent to use the trademark in any application. Hence, firms anticipating expansion into other countries, particularly China, should apply for registration at the earliest. In addition to thisbrands should register their trademarks in the respective transliterations as well.

In 2016, Michael Jordan, the basket ball star, received a favorable verdict from the Supreme Court of China, that arose out of the legal battle against Qiaodan Sports, a Chinese sportswear company using the Chinese transliteration of Jordan’s name as its trademark. A similar case occurred with Viagra, wherein the transliteration of Viagra in China was “Weige” and was registered in China. Thus, despite several lawsuits, Pfizer has failed to gain ownership of the Chinese trademark, Weige, and has been unable to force Vietnam and others to stop using the trademark.

In spite of the existence of various Conventions aiming towards the protection of trademarks that are “well-known” such as the Paris Convention[4], The TRIPS Agreement[5], The Madrid Protocol as well as the WIPO Joint Recommendation Concerning Well Known Marks[6], these are not enough to counter this problem. India, in its Trademarks Act has provided for protection of foreign trademarks with respect to the “Trans-border Reputation” principle.

It was a principle followed in India that the reputation of a good should benefit its owner even in a foreign land where the goods are not being sold.[7] However, the landmark judgment of Toyota case[8] modified this principle and held that trans-border reputation can only be considered if there are customers of the claimant’s product in the claimed jurisdiction and that such customers exists before the infringer’s activity was established.

The problem of squatting needs to be tackled at an institutional level, both domestically as well as Internationally. Further, with regard to dispute resolution[9], although WIPO has a mechanism but it rests on consent from both parties that is more than often not accepted by the squatters as they prefer their home countries. Another problem which may arise is when firms register their trademarks in China but face problem while expanding their services due registering in only particular classes of trademarks.

Business leaders need to identify the right strategies to protect their Trademark before entering the markets internationally. International registration of Trademarks is still not a prevalent practice. Further, China should introduce multiple class registrations and to first to use policies. These policies are also practiced in the United States as well as in India. The best way to challenge trademark squatting is to assert the filing that is done with bad-faith. Bad faith filing generally refers to “an intentional dishonest act by not fulfilling legal or contractual obligations, misleading another, entering into an agreement without the intention or means to fulfill it, or violating basic standards of honesty in dealing with others.”[10] However, this can be costly to prove due to the extensive procedure and expansive needs of evidence to support claims. Bilateral and multilateral treaties between states may also help to ensure that Trademarks registered in one jurisdiction are protected in others. Undoubtedly, it is a multifaceted issue that must be solved at every level

Author: Ruchika Srivastava, Intern at  Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

References:

[1] Amazon’s Prime, Echo hit trademark hurdles, https://timesofindia.indiatimes.com/companies/amazons-prime-echo-hit-trademark-hurdles/articleshow/63650805.cms, 07 April, 2018

[2]  World Intellectual Property Organization, WIPO Intellectual Property Handbook, 90 (2008).

[3] David Pierson, Trademark Squatting in China Doesn’t Sit Well with U.S. Retailers, L.A. TIMES, Mar. 28, 2012, http://articles.latimes.com/2012/mar/28/business/la-fi-chinatrademark-squatting-20120328.

[4]The Paris Convention for the Protection of Industrial Property, 1883.

[5] Agreement on Trade Related Aspects of Intellectual Property Rights, 1995.

[6] World Intellectual. Property. Organisation, Joint Recommendation Concerning Provisions On the Protection of Well-Known Marks, Sept. 20-29, 1999

[7]MilmetOftho Industries &Ors. v. Allergen Inc. (2004) 12 SCC 624

[8] Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Ltd. & Ors,  AIR 2018  SC 167

[9]World Intellectual Property Organisation, Alternate Dispute Resolution

[10]  http://dictionary.law.com/Default.aspx?selected=21

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Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.” [1]

The foundation of this concept was laid in the case of Amarnath Sehgal v. Union of India[2]. This was a landmark judgement delivered by the Delhi High Court thereby setting precedent and contributed in increase in understand and scope of moral rights given under Section 57[3] of the Indian Copyright Act, 1957. Moral rights are generally meant for protecting the work of the author and maintaining its integrity which essentially means preventing it from getting mutilated or distorted or altered in any undesired manner which may result in hampering the image of the author or its use in such a way that it may hurt the sentiments of the author.

The latest Bollywood glitch between Javed Akhtar and Armaan &Amaal Malik has been with respect to the same. The renowned Bollywood lyricist Mr. Javed Akhtar has issued legal notice against Armaan & Amaal Malik and Super Cassettes Industries Pvt. Ltd., for violation of his moral rights by recreating the song ‘Ghar Se Nikalte Hi’. It is alleged by Mr. Akhtar that the newly created version has used the original “mukhda(first stanza)” of the song repetitively. Although it is combined and mixed with different composition and different lyrics, the essence of the song remains the same. Mr. Akhtar further claims that the new version infringes his “moral rights” under Section 57 of the 1957 Act and aggrieved by the fact that ‘Kunaal Verma’ has been credited as sole author for the recreated version denying Mr. Akhtar, his statutory right of authorship.

There is no doubt that ‘Mukhda’ is the soul& essence of a song to which we all shall agree and so Mr. Akhtar has every right to be identified and credited for the same, especially when the original track bears his name in bold. Further, the fact that his right to royalty (Section 18[4] and 19[5]of the 1957 Act) in respect of using of lyrics which were originally given by him, has been jeopardized as they will not be able to receive royalty without the recognition of authorship. Even the Apple’s Itunes does not recognize him as the original lyricist which has further aggravated the entire situation.

However, the anomaly which can be observed in this notice is that it has been issued to Armaan Malik, who merely is the performer and singer and had nothing to do with the authorship of the song and in my opinion,

it should have been issued to lyricist of the new version who has in fact distorted the entire song. Other shortcomings of the legal notice may be that-

  • There was no legal notice issued to Apple’s Itunes for having failed to mention Mr. Javed Akhtar as the lyricist of the song, although they have specifically violated Section 52-A[6].
  • Legal Representative of the author can exercise the rights conferred upon the author of a work, other than right to claim authorship of the work. The proper body to allege on the recreated version as trying to escape the payment of royalty is IPRS (Indian Performing Rights Society), to whom Mr. Akhtar has assigned his rights.
  • Notice issue to Armaan Malik for simply making a public comment on You Tube page in which he failed to acknowledge the original authors seems senseless and baseless.

There have been several cases with respect to moral right &recreated versions, but a penumbral area exists as nowhere the term ‘recreation’ has been defined in the 1957 Act per se, but if we go by the definition of the word ‘adaptation’, Section 2(a)includes in relation to any work, any use of that work involving in its alteration and rearrangement. Section 14 also confers such type of right to the owner of any literary, dramatic artistic or musical work. If we comply with these provisions, then T-Series, being the owner of the original work has the right to make an adaptation or recreated version. But the question arises that whether recreation of original work amounts to violation of moral rights of the original authors of that work?

Section 57[7]of the 1957 Act provides two rights to the author i.e., of paternity (right to claim authorship) and integrity (to claim damages for any mutilation, distortion, modification of the work prejudicial to his honor or reputation). These rights are also protected under Article 6bis[8] of the Berne Convention where under the right to Paternity, author can claim due credit for any of his work.

But the catch here is that Section 57 protects the right of authors only when it is established that the alteration or modification of the work is prejudicial to author’s reputation and also there is some relation between the original and recreated work. This view has been reiterated by the court in Manu Bhandari v. Kala Vikas Pictures.[9]

From Amarnath Sehgal’s case[10] the Indian Copyright legislation has moved further on broadening the scope of artist’s reputation and interest and the outcome of present matter will also add up to it.

With respect to integrity rights, I am of opinion that on comparing and reading the lyrics of original and recreated version there is nothing dishonorable or prejudicial which can damage the reputation of the original authors. If this is treated as violation of moral rights, it would send a signal of warning for music industry and the trend of making remixes. As nowadays with increase in number of remixes or recreated versions, this issue of moral right will be one of the major debates in India and even though it remains unsettled, it is essential to protect the interest of original writers so that their music does not wither away with the modern remixes.

Author: Prashant Arya, Intern at  Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

References:

[1]Universal Declaration of Human Rights, Article 27(2)

[2]Amarnath Sehgal v. Union of India,2005 (30) PTC 253

[3] https://indiankanoon.org/doc/1710491/

[4] https://indiankanoon.org/doc/1703533/

[5] https://indiankanoon.org/doc/262036/

[6] https://indiankanoon.org/doc/588136/

[7]Supra, fn.4

[8] Independently of the author’s economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honor or reputation.

[9]Manu Bhandari v. Kala Vikas Pictures,AIR 1987 Del 13

[10]Supra, fn.3

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People of India see cricket not only as the most popular sport in India but also they follow it as a religion which accounts for such great success of IPL tournaments in India. There is a lot of money invested and involved in organizing IPL and the role played by IPR in making it a success across the world can’t be ignored but certainly Indians don’t give much heed to the Intellectual Property Rights[1] whose omnipresence can be noticed all over the field whether it is brand name, team name, team logo, slogans, tag-lines used/advertised by various IPL teams important role in increasing the popularity of a team. These trademarks are registered and protected under Trademarks act, 1999. Today it is universally accepted fact that the trademarks play more important role as compared to the dogmatic view that trademarks are just symbols to distinguish goods belonging to a person from another person, TM has now evolved as an agent of creating good will of the particular brand and contribute greatly in a brand’s business by helping them in establishing their brand value[2]. Trademarks are well thought of artistic symbols which are developed after rigorous analysis of the psychological effect it would have on people’s minds.

Many such trademarks can be seen in merchandise of various teams such as t-shirts, caps, shoes, etc. But as these merchandise are produced to promote a particular team, the sponsors supporting them and to make a good business out of it for which these are sold at high prices which can be afforded by only very few people. Taking advantage of this gap between a major portion of population, their desire to wear the merchandise of their favorite team or players and weak enforcement of TM laws in the country, many people get into business of producing and selling such fake copies (nearly perfect visual imitation) of these merchandises. The TM owners also don’t make much effort to stop such practices, the reason could be that they are confident of the fact that their target population would only purchase the official merchandise and even if some people wear fake t-shirts it will also in a way increase the popularity of the particular team amongst people.

Street vendors selling (fake) T-shirts of these teams can be commonly seen on the streets of India. While a purchaser won’t get confused about the originality of the t-shirts and most of the times he will be sure about the absence of any kind of relationship between the T-shirts being sold to them and the official teams (Although the reason for purchasing them would be their visual similarity to the official merchandise) but there is a great ‘likelihood of confusion’ regarding its association with the TM owner, to a third person that can certainly have an adverse effect on a person’s choice to buy the original stuff.

One such example is; when the company did not even have a single store opened in the city, t-shirts with a perfect imitation of ‘ed-hardy logo’ were easily found hanging on the street vendors’ shops[3], the people were actually turned off due to this fact and many decided not to purchase the original apparel from the store when later the official stores were opened in the city, the same also has been depicted in a movie scene in ‘chance pe dance’ where school kids are shown raising doubts regarding the originality of ed-hardy t-shirt worn by Shahid.

These practices fall under the concept of ‘passing off’[4] which is free riding on someone else’s goodwill by misrepresenting one’s goods as that of others. This also leads to dilution of the original mark as it reduces its distinctiveness.

In the arsenal vs Mathew heed[5], selling unofficial memorabilia and souvenirs carrying the TM of Arsenal football club for over 30 years was held by the ‘England and Wales Court of Appeal’ to infringe the trademark rights of the TM owner. The question before the court was ‘whether trade mark use was necessary for infringement of a trade mark?’ Which the court answered in negative and held that The use of the Arsenal Marks on the goods in question would jeopardize the ability of the trade marks to guarantee origin.”

The above mentioned judgment if followed in India would result into a harsh blow upon every such person who in some manner is involved in producing, distributing or selling such unofficial merchandise but as a matter of fact India has not seen a single case on such subject matter. Since, section 29(2)(c) clearly lays down that, “a registered TM is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which because of its identity with the registered TM and the identity of the goods or services covered by such registered TM is likely to cause confusion on the part of public, or which is likely to have an association with the registered trade mark.”

“Sub-section (3) of the same section also says that in any case falling under cause (c) of sub-section (2), the court shall presume that it is likely to cause confusion on the part of the public.” Therefore it can be anticipated that if such case arises in future, the Indian courts are likely to follow the judgment of their foreign counterpart. But since the Indian courts can’t take suo moto action against such practices, nothing much is likely to happen in this regard anytime soon.

Author: Koonal Tanwar,  LL.M., NALSAR University of Law, Hyderabad  intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

References:

[1] http://www.rediff.com/business/report/counterfeit-tales-dont-buy-a-fake-online/20180127.htm

[2] Frank I. Schechter, ‘The Rational Basis of Trademark Protection’, Harvard Law Review, Vol. 40, No. 6 (Apr., 1927), pp. 813-833

[3] http://www.dnaindia.com/business/special-is-india-ready-for-luxury-1239076

[4]http://www.rslr.in/uploads/3/2/0/5/32050109/trademark_infringement_and_passing_off.pdf

[5] ARSENAL FOOTBALL CLUB PLC Vs.MATTHEW REED [2003] EWC A C iv 696

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It is common to witness infringement cases in the intellectual property law sector but rarely there are suits which point out to the defects in the system managing the grant and working of patents, trademarks or other intellectual property rights.

In the case of Shamnad Basheer v. Union of India and Others[1], a writ-petition was filed against the defaulting patentees as well as the Patent Office as both of them were not complying with the statutory requirements.

Facts leading to the case

Section 83 (g) of the Patents Act, 1970 clearly mentions that “patents are granted to make the benefit of the patented invention available at reasonably affordable prices to the public”.

To fulfil such an object, Section 146 of the abovementioned Act specifies that a periodical statement as to the extent to which the patented invention has been worked on a commercial scale in India has to be submitted by every patentee as well as licensee. The Controller has the power under the same section to order any patentee (or licensee) to do the same.

But the real scenario seems to be very different as was pointed out by Professor (Dr.) Shamnad Basheer (the Petitioner in the case) through a number of arguments and evidences that neither the ‘commercial working statement’ has been submitted by many Patentees nor any action is taken against them by the Controller of Patents.

Issue

  1. Manifest failure to comply with Section 146 of the Patents Act, 1970 as well as no action initiated under Section 122 of the same Act against the patentees who did not follow the procedure mentioned under Rule 131[2] of the Patent Rules, 2003.
  2. Whether information provided under section 146 of the said Act “Confidential” nature of licensees and sub-licensees.

Arguments by the Petitioner

  • Annual Report (2012-13) of the Office of the Controller General of Patents, Designs, Trademarks and Geographical Indications clearly indicated that out of 43920 patents granted in the year 2012-13, only 27946 of them submitted Forms (Form-27) as required by Section 146 and Rule 131 (mentioned above). The fact that only 6201 patents out of them were found to be commercially working in the territory of India shows that neither the Patent Office nor the patentees consider following the general principles of law.
  • Furthermore, the Petitioner presented a query as was raised in front of the Patent office under Right to Information Act (RTI), 2005 which was basically an inquiry as to whether any action was taken against those Patentees or licensees who did not submit the Form-27? The answer was in negative indicating that no action had been taken against the defaulters.
  • An interesting point that was further raised was that when NATCO Pharma was granted compulsory license (in relation to a patent numbered 215758 o 9th March, 2012), it was ordered to report accounts of sales to the Controller on a quarterly basis, on or prior to the 15th of each succeeding month but when a query related to the same was raised before the Controller General of Patents, Designs, Trademarks and Geographical Indications on 19th January, 2015, no details were available in the concerned office.
  • Furthermore, it was informed to the Petitioner by the Controller of Patents and Designs that Form-27 is filed by Patentees only and many Patentee such as M/s Telefonaktiebolaget LM Ericsson state in the column wherein they are required to furnish information regarding licensees that “As all the licenses are confidential in nature, the details pertaining to the same shall be provided under specific directions from the Patent Office.”

Court’s Order

According to the Delhi High Court the information regarding licensees (and sub-licensees) cannot be termed as confidential as all information regarding the grant of patent is already available on the website of the Patents Officeand failure to disclose such information by the Patentees would mean non-compliance with the requirements of Section 146 of the Patents Act, 1970 and thus, making such patentees liable for action.

Furthermore, It is pertinent to point out that the Delhi High Court had opined on 10.01.2018 that no information that is required to be filled in Form 27 is ‘confidential’. This was negated on 07.02.2018 stating that information cannot be held ‘not confidential’ as it would be voilative of section 146.

The case has been pending in the Court since 2015 and the Court has directed the Patent Office to provide a proposed modified Form27. Few of the recommendation have also been sent by stakeholders. (read here)

Observation

The systematic failure is a topic seldom touched upon in India as already mentioned in the beginning of the article. The fact being that the internal process of an institution is not thoroughly monitored due to which the persons availing facilities get a way to skip the statutory requirements as laid down by the legislature. Hence, it has become all the more important that people should be made aware that they have certain duties related to the rights they receive from an institution and non-compliance with such duties entails action against them.

One such institution is the Patent Office(s) which grants Patent. The basic purpose of granting a Patent is not to provide exclusive rights to the Patentee over his invention but to ensure that the invention is commercialized for the welfare of the public at large. Hence, submission of ‘commercial working document’ as mandated by the Patents Act, 1970  should not be ignored either by the Patent office or by the Patentee otherwise the whole concept of grant and protection of an invention would come down to nothing.

This case was a progressive step taken to ensure that the common man as well as the institutions understand their responsibility in a field (that is, Intellectual Property Rights) which is in its budding stage in India.

Author: Priya,  intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

References:

[1] W.P.(C) 5590/2015.

[2] Form and manner in which statements required under Section 146(2) to be furnished.

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As a result to the PIL filed by Prof. Shamnad Basheer, complaining against IPO for noncompliance of section 146 (working statement of Patent invention), in the year 2015,  the Delhi High Court, recently in January 2018, passed an order directing the Government to submit an affidavit outlining a plan for putting in place a standard operating procedure/enforcement mechanism with respect to Form 27 as well as taking an action against errant patentees. with respect to this, the Paten Office invited the stakeholders to come up with  their suggestions for making Section 146 and Form 27 effective.

The IP India portal has provided with suggestions provided by various organizations (here and here), few of which has been majorly discussed by most of the stakeholders as provided below:-

  • One Form One Patent: The first and foremost issue that most of the stakeholders such as Dr. S.K. Murthy Core-Committee Member, In-House IP professionals (IHIPP) forum, DR. P. Ganguly Vision- IPR(Patent Professional Firm), Federation of Indian Chambers of Commerce and Industry(FICCI) raised was the provision of submitting different forms for different Patents. Most of the organizations are with a view that bringing in a single form for multiple Patents would fulfill the business objectives of the present world.
  • One Product One Patent: Many stakeholders including S.S. Rana & Co., Singh & Singh Law Firm LLP which pointed out that presently, Form 27 runs on the presumption that one product is equivalent to one patent, which is not the case with many industries where one product is not based on one patent but is actually covered in portfolio of patents and such portfolios are owned by different Patentees. S. Majumdar & Co, an IPR Firm based in Kolkata mentioned that there are many cases especially in FMCG industries, Information and Communication Technology, semi- conductors, Electronic companies, etc, where one product is equivalent to various Patents. Therefore, It is suggested that form 27 may allow patentees to make a statement to the effect that Patent is not worked in a standalone format but form a part of the portfolio licensing program. H. K. Acharya & Company, an IPR Agent firm suggested that it would be sufficient to provide information about product in which the Patented product/process is used rather than providing all the technologies, applications and product where the patent is so deployed or used. Dr. Shital Chopra ASSOCHAM suggested that the forms should provide single statements for multiple Patents, specifying single Patent forms a part of the portfolio license.
  • Quantum Valuation: De Penning & De Penning, Federation of Indian Chambers of Commerce and Industry, IPR International Services, KRISHNA & SAURASTRI ASSOCIATES and others observed that Form 27 has nowhere described the method of calculating sales and commercial use of Patents, it becomes difficult to calculate the value of Patent in the market because  of various confusion such as whether taxes is to be included or not or whether the end product is to be valued, etc. While recommendations from Federation of Indian Chambers of Commerce and Industry, Huawei Technologies Co Ltd, China emphasized that provision of submitting such quantum and valuation’ should be removed, there were few stakeholders such as Bosch Group of Companies, CIPA Patents Committee, Chartered Institute of Patent Attorneys (‘CIPA’), London and Hindustan Unilever Ltd., Lal Lahiri and Salhotra,  which showed their concerns over the same and have expressed its interest in a guidance notice in order to clarify on how to ascertain the quantum.
  • Simple, Clear and Unambiguous: Few Academicians such as Raj S. Davé IPR Chair Professor for Excellence at Gujarat National Law University and Justice Asok Ganguly, Former Supreme Court Justice of India and Adjunct Professor at Gujarat National Law University, Prof. Shamnad Bashir ,Nirma University Pankhuri Agarwal, reseach associate N. Sai Vinod, Advocate along with Hrishikesh Raychaudhury Corporate Law Group , Singh & Singh Law Firm LLP and other stakeholders pointed out that the existing Form is ambiguous regarding the information related to the commercial scale, scope of public requirement, disclosures and reasonable price etc. It is requested to make it simple, clear and unambiguous and limit it to statutory requirements that has to be met, which is ‘whether the Patent has been worked or not.’
  • Information regarding Manufacturing in India and Imported to India: The current form is concerned with the information regarding ‘working of Patent in India’, however, nowhere in the Act, the term ‘working Patent’ has been defined. Obhan & Associates, KRISHNA & SAURASTRI ASSOCIATES and ALG India Law Offices LLP highlights that there exists an ambiguity with respect to the term ‘working’ which may or may not involve manufacturing in India, the quantum value of production of products sold in India or for only exporting purpose.  It is suggested that the Act must clearly explain as to ‘what is working Patent’ and is also recommended that ‘Working Patent’ must be limited to India as far as it meets the public requirement. Huawei Technologies Co Ltd, China interprets the IPAB decision of Bayer Corporation v. Union of India and Article 27(1) of TRIPS agreement and identifies that the term ‘working’ may include importation.
  • Frequency of Form of Submission: According to Section 146 of Act, information regarding the working Patent is to be submitted annually, with intervals not being less than six months apart. Therefore, this increases the burden on the Patent office as well as the Patentees and it is also difficult to collect the relevant information on such a frequent basis. The  same issue was brought forth by Eri Honda(Ms.) Corporate Intellectual Property and Legal Headquarters Canon Inc., Japan, Japan Pharmaceutical Manufacturers Association, Japan, Remfry& Sagar  and  Obhan & Associates. It is pertinent to note that most of these stake holder have suggested to  reduce the frequency of submitting a statement to once in every three years.
  • Confidentiality: Most of the stakeholders such as In-House IP professionals (IHIPP) forum, Anand & Anand, K&S Partners, Lexorbis IP Attorneys etc, are concerned about disclosing the confidential information related to their licensees and other related data due to the requirement of the publication of the submitted information. SKS LAW ASSOCIATES went ahead and noted that such provision/practice is not business savvy. Further, Singh & Singh Law Firm LLP highlighted that such disclosure of information is also contrary to section 62 of the Patent Act which provides for an opportunity to the Patentee to request the Controller to not to disclose the information to anyone except the order of the Court. Moreover, on a careful perusal of Section 146(3)  r/w Rule131(3), it can be observed that the use of the word “may” in the provision,  puts a discretionary power  on the controller to disclose the information or not. However, the Controller is required to apply his mind while practicising the  descretion vestedin  These stakeholders also Laxmikumaran & Srihdaran mentioned that provision for providing such information may be retained, however, the disclosure of such statements must be done away with.
  • Exemption from Form 27: while deliberations for modifying Form 27 was going on, few of the stakeholder also suggested to give exemption from submitting Form 27 for the first three years of the patent issued because the statutory limit for compulsory licensing is three years.
  • Penalties: Section 122 provides for penalty for not complying Form to 27. Such penalty includes imprisonment as well, which is believed to be harsh. Thus, stake holders like Hindustan uniliver or Industries in association with USA (Global Innovation Policy Center (GIPC) and U.S.- India Business Council (USIBC)), have suggested to strikeout such penalty for failing to provide working statement. Moreover, IP firm Remfry and Sagar, came up with a view that compulsory licensing as a penalty  for non-compliance of provision would be enough for deterring the errant Patentee. However, there are few that stakeholders like  who strongly  support the said provision with a view that striking off  of criminal penalty would dilute the system leading to its rampant misuse.
  • Miscellaneous: There are suggestions like removal of sec 146 and rule 131 completely, in order to ease the business of Industries. where digitalization is taking over the world and most of the most important work can be done through internet. It is recommended to digitalise the form in order to make it convenient for the Patentee to submit the Form.

It is incredible to note that the stakeholders were also as much a part of this process as the Government. As much as 64 stakeholders came forward with various issues with regard to Form 27 and its solutions. Stakeholders included major keyplayers in the market such as Bosche, Japanese IP Group, FICCI, Huawei Technologies Co Ltd, China, CIPI, London and many more. There were other responsible academicians from various Law universities and the rest were Intellectual Property Firms such as Lexorbis, Anand and Anand, S.S Rana and others.

The above mentioned are the few suggestions to the issues that have been recommended by majority of Organizations. It can be observed that Form 27 needs to be a little flexible with the changing dynamics of Industries of the Contemporary practices. Also, the Act needs to be more clear about its provisions and explanations with respect to ‘Working Patent’ , ‘disclosure of information’ and frequency of submission of Form 27. This would not only make the procedure smoother for the Patentee, but would also help the Patent Offices to function swiftly. The proposed revised form may be something like as provided below.

                                    

Author: Pratistha Sinha, Associate, Yogita Shinde, Intern  and Mudiganti Sai Krupa, Intern at  Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at swapnils@khuranaandkhurana.com.

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The cyber laws particularly the laws pertaining to data protection and data security in India are in the nascent stage and are still developing, with the only significant legislations being the Information Technology Act, 2000 (“ITA”) and the “Reasonable practices and procedures and sensitive personal data or information Rules, 2011”. Due to the paucity of legislation in this regard, the legal issues pertaining to an IoT service provider can be fully addressed only by drafting and executing agreements incorporating relevant provisions to safeguard the interest of both the IoT service provider and the IoT user. The key issues to be taken into consideration for an IoT environment have been discussed below:

Data Privacy & Protection

With innumerable IoT devices talking to each other via the internet, the potential for a data security breach is high and as more and more IoT devices are introduced in the market, this issue would only complicate further.The provisions relating to data protection of individual personal information are covered under the Information Technology Act, 2000 (“ITA”) and the “Reasonable practices and procedures and sensitive personal data or information Rules, 2011” (“Rules”) issued under Section 43A of the ITA (as amended). Section 43A of the ITA deals with protection of data in electronic medium and provides that when a body corporate is negligent in implementing and maintaining ‘reasonable security practices and procedures’ in relation to any ‘sensitive personal data or information’ that it deals, possesses or handles in a computer resource that it owns,operatesor controls and such negligence causes wrongful loss or wrongful gain to any person, such entity shall be liable to pay damages by way of compensation to the person so affected. Further, Section 72 of the ITA, enunciates penalty for breach of the confidentiality and privacy of the data collected.

In order to ensure the privacy and protection of the data collected, the IoT service provider can have specifically drafted privacy policy detailing the private information that is collected by the service provider, the scope and extent of the use such information is put toand the steps taken to ensure the protection of the collected information.

The Service provider can also adopt precisely drafted terms & conditions which typically regulate, Limitation of Liability, Responsibilities of the service provider and consumer/user, Indemnification, Intellectual Property Rights, Assignment/ Licensing, and Dispute Resolution etc.

Further, in order to ensure compliance with Section 72 of ITA, the service provider can execute stringently drafted Non-Disclosure Agreements with its customers.

Liability Issues

Considering the volume of the data/ information and the number of stakeholders involved, which in all likelihood is going to increase in the coming time, the service provider may be required to outsource the responsibility of accumulating, processing and safekeeping of the data to third party “specialist data brokers/vendors”. In such a scenario, it is pertinent that, prior to any disclosure to any third party, the service provider takes all the reasonable steps to ensure that there is no breach of the privacy and data protection clauses. The Service provider can also execute separate vendor agreements providing guidelines to protect “sensitive personal data or information” in accordance with the provisions of the Indian IT Act.

The service provider needs to strike the right balance concerning the “allocation of risk”. This is particularly vital in order to set the limitation of liability for the service provider in the event of breach of data privacy and non-disclosure requirements. The allocation of risk can be dealt with by incorporating relevant provision in the terms & conditions of use of service. Alternatively, the service provider can have software End User Licensing Agreements (EULA) drafted that incorporate the relevant clauses which can be executed each time a user of IoT agrees to use the service provider’s software/services.

Data Ownership

Due to the involvement of multiple stakeholders/IoT users, involvement of third parties and the multitude of sources of the data, the data may come into possession of many data processors. The IoT service provider, being the data controller would essentially determine the scope, extent, manner and purpose of the use of the personal data, whereas the service provider may have different third party data processors, functioning to process the data on the instance and under the control of data controller. Therefore, an aspect worth noting is that since there are numerous channels of dissemination of the data/information and multiple stakeholders involved, the IoT service provider (data controller) at all times should ensure that the line between data controller and data processor does not get obscured. Additionally, the Machine Generated Information (MGI) and Machine to Machine Communication (M2M) generated in an IoT environment would also pose ownership and liability issues.

In light of the above, the allocation of risk and responsibilities between the parties must be defined preciselyin particular, which party bears the liability for any damage caused to the user of an IoT and which party owns the information generated by the IoT project. Hence, warranties and indemnities regarding data protection, security and privacy will become important to help draw the line between data controller and data processor which are made all the more complex by the large number of stakeholders involved in an IoT environment. The question that who will own the data will be purely based upon the agreement between the two entities.

Privity of E-Contracts

The issues pertaining to data ownership, security and privacy in an IoT environment can be reasonably addressed by contracts between device manufacturers/ IoT service provider and the IoT users. These contracts may be entered by way of click wrap and shrink-wrap contracts which are basically End User Licensing Agreements (EULA) governing the terms and conditions of use of the software or device. Like any normal contract, an e-contract can form a valid and binding relationship between the parties under the Indian Contract Act if it fulfils the essentials of a valid contract as provided under Section 10 of the Act. In an IoT environment, there is no privity of contracts between multiple IoT users which may lead to complexity in case of a dispute. Therefore, the draft agreement should contain express provisions regarding third party liabilities and dispute resolution.

Product Liability & Consumer Protection

In case where an IoT device malfunctions, or if data or software is compromised or lost, individuals and businesses may suffer devastating losses. Such device failures may result not only from a device defect but also from a network failure to provide communications as needed. Thus, it will be important for IoT device manufacturers to purchase and cover themselves with product liability insurance.

Intellectual Property Rights

An IoT environment facilitates data generation and content creation including Machine Generated Data. The question that arises is, “When an original data is created by virtue of the interaction of various devices in an IoT environment, which may include, inter alia, a new process of arriving at desired results, who claims the IP Rights in such content/data/process?” The ownership of the title and claim to the IP Rights needs to be expressly enunciated in the agreements executed between IoT service providers and device manufacturers/consumers, especially considering the fact that the IP rights confer upon the owner a host of other rights like licensing and commercialization of their IP to further exploit the commercial utility of their IP.

Conclusion

The legal wisdom regarding the IoT is inadequate due to the lack of sentience and awareness in this regard. With the advancement in technology, the IoT environment continues to evolve at an unprecedented rate and the legal acumen regarding IoT cannot lag behind for long. Europe, US and Australia have already embraced the legal implications of an IoT environment and it is about time that Indian legislature triggers a befitting enactment!

About the author: Anirudh Sarin, Trademark Attorney at Khurana & Khurana, Advocates and IP Attorneys and can be reached at anirudh@khuranaandkhurana.com

References:

[1]https://www.wrighthassall.co.uk/knowledge/legal-articles/2016/08/30/internet-things-what-it-and-what-are-legal-issues/

[2]http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research

%20Papers/Internet_of_Things.pdf

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