Intepat IP Services Pvt Ltd (“Intepat”) is a niche Intellectual Property (IP) services Company that provides a broad range of customized services in Intellectual Property matters, that includes patents, trademarks and design.
A domain name represents an internet protocol resource, such as a personal computer used to access the internet, a server computer hosting a website or the website itself or any other service communicated via the internet. For example, edu- educational institutions, org – organizations (non profit), com – commercial business, etc. Passing off on the Internet litigation is not very common in India. The modern tort of passing off has five elements:
* a misrepresentation
* made by a trader in the course of trade,
* to prospective customers of his or ultimate consumers of goods or services supplied by him,
* which is calculated to injure the business or goodwill of another trader and
* And which causes actual damage to a business or goodwill of the trader by whom the action is brought or will probably do so.
The first reported Indian case was Yahoo! Inc. v Akash Arora, the former, the global Internet media search and information network, filed an action against the latter on the Internet as those of the plaintiffs’ by adopting the domain name “yahooindia.com”. The plaintiffs submitted that their domain name “yahoo.com” was registered with Network Solutions Inc (NSI) since 1995, that it had become well-known and they had obtained registrations on the trademark “Yahoo” or variations thereof in approximately 69 countries, although not in India. The Delhi High Court rejected the defendants’ argument, on the grounds, inter alia, the trademark law applies equally to domain names on the Internet; that, where the parties are in the same or a similar line business, the use of similar names would result in confusion and deception; that the disclaimer by the defendants on their web site did not reduce the likelihood of the confusion and that the mark was widely publicized and well-known; and that the fact that “Yahoo” was a dictionary word was no reason to deny protection for the mark. The mere fact that the Internet users were technically educated and literate; this would not reduce the risk of confusion.
The court held that: “In an Internet service, a particular Internet site could be reached by anyone anywhere in the world who proposes to visit the said Internet site. With the advancement and progress in technology, services rendered on the Internet has come too recognized and accepted and are being given protection so as to protect such provider of service from passing off the services rendered by other as that of the plaintiff. As a matter of fact in a matter where services rendered through the domain name in the Internet, a very alert vigil is necessary and a strict view is to be taken for its easy access and reach by anyone from any corner of the globe.”
REMEDIES AVAILABLE FOR PASSING OFF ACTION
There are two types of remedies available: a) Civil and b) Criminal.
CIVIL REMEDIES: Under Section 135 of the Trademarks Act, 1999, the court grant relief for Passing Off includes, Permanent & Interim injunction and either damages or an account of profits together with or without any order for delivery up of the infringing labels and marks for destruction or erasure.
CRIMINIAL REMEDIES: In case of a criminal action for infringement of registered trademark Section 103 of the Trademarks Act, 1999, the offence is punishable with imprisonment for a term which shall not be less than six months but which may extend to three years and with fine which shall not be less than INR 50,000 but which may extend to INR 200,000.
Article 4G of the Paris Convention advocates for divisional patent applications which seek to ensure that the inventors’ multiple inventions are protected individually and that the objections raised in the examination report are rectified in a productive manner. In India, Section 16 of the Patents Act, 1970 incorporates the provision for division of applications. The provision stipulates for filing of an additional application in respect of an invention disclosed in the provisional or complete specification already filed in respect of the parent application. Such application can be filed by the applicant voluntarily or with a view to remedy the objection raised by the Controller on the ground that the claims of the complete specification relate to more than one invention.
Ascertaining the Effectiveness of Section 16
The provision endeavors to protect multiple inventive concepts separately. However, the provision has been misused in order to monopolize a particular segment or to frivolously stretch the examination process. A brief understanding of the following cases can be helpful in ascertaining the effectiveness of Section 16-
1) The Delhi Network Of Positive People V. Union Of India & Ors. [W.P.(C) No.2867/2014]
The case concerns with Anti-Retrovirals (ARVs) drugs which when taken in combination of three, help in the treatment of HIV. Prices of these drugs were exorbitant till a bunch of Indian generic pharmaceutical companies offered to make the same medicines at much lower costs. This resulted in a fall in prices of the said medicines and which in turn enabled the developing and least developed countries to provide treatment to persons living with HIV/AIDS. In order to neutralize the effect of low cost medicine in the market, the patentee of ARVs went ahead to file multiple patent applications relating to individual drugs and monopolize the sale of the same.
The court accepted the allegations made against the drug company, that the divisional applications were filed with the intent to keep the patent applications alive and/or to revive the patent applications which were about to be rejected/refused. Therefore, it could be inferred that the applicant had been misusing the provision for filing divisional application with claims which are identical to the claims of the parent application.
However, the procedural intricacies often render the deliverance of justice ineffective as it happened in this case. The court left the petitioners devoid of any remedy citing the following reason:
Although the errant patent applications suggest of abuse of procedure, it is beyond the court’s jurisdiction to provide the form and manner in which any application for patent may be processed in the Patent Office and the details to be furnished by the applicant to the Controller etc.
2) LG Electronics Inc. v. The Controller of Patents & Designs 7 Ors. [Order No. 111/2011. IPAB]
While adjudicating on a divisional application filed by LG Electronics, the Board negated the argument of the applicant that the word “or” in the provision confers discretion upon the applicant i.e., to divide a patent application suo moto. It was held that the word “or” was conjunctive in its aim and hence the divisibility of an application shall be based on a plurality of distinct independent inventions. Hence, the Board disallowed the appeal as the claims in the parent application were same as those contained in the divisional application.
If the applicants in such cases are given unqualified liberty to file divisional applications, the examination and re-examination stage will not terminate in a time bound manner and the patenting processes in the country will be severely impeded. Such a custom will harm the society as it will deprive them of gaining access to the patented works within a reasonable time. Frivolous divisional applications can be used as a tool to extend the life of the patent, thereby stretching timelines as prescribed under the law.
Law strives to provide a remedy to its subjects, which at times becomes impossible due to the ill intent of men with whom the law concerns. Divisional patent applications have been transformed into a tool to deceive the authority and the public at large. From here, the onus lies upon our legislature and the executive to fill in the loopholes in the patent application processes and curtail frivolous filings of divisional applications.
A recent Supreme Court judgment pronounced over the issue of “bad faith filings” has baffled the business world as well as legal experts. In Toyota Jidosha Kabushiki Kaisha vs M/S Prius Auto Industries Limited (Civil Appeal Nos.5375-5377 OF 2017), the apex court has refused to accept the automobile giant Toyota’s objection against registration of the mark “PRIUS” in favour of an Indian automobile parts manufacturer, Prius Auto Industries Ltd. Toyota pleaded “bad faith” on the part of Prius Auto and the same was rejected by the Court.
Toyota had launched its car, PRIUS, in several countries in the year 1997. However, the car was launched in India only in 2010, by which time Toyota had not filed for registration of the mark ‘PRIUS’ in India. Prius Auto, on the other hand, had obtained registration for the mark PRIUS in India in the year 2002 and had been using the same since the year 2001 for its business of automobile spare parts. In its judgement, the Supreme Court did not find Toyota’s online evidence sufficient as to conclude that back in 2001-02 its brand PRIUS was well known in India. The Court was of the view that the online evidence was not ‘a safe basis to hold the existence of the necessary goodwill and reputation’ because in the year 2001 India had limited online exposure. Hence, the ruling ended up being in favour of Prius Auto on the ground that it was the first to use and register in India and there cannot be any element of “Bad Faith” on the defendant’s part.
A Past Perspective
Under The Trade Marks Act, 1999 “bad faith” has not been defined or elaborately discussed except a contextual mention under section 11(10) (ii), forming part of the relative grounds for refusal of registration. Therefore, it becomes essential to find an epicenter for this analysis back in the previous rulings of Indian Courts on the subject matter.
In the year 2004, Supreme Court had held that non-use of a mark by foreign companies in Indian market will not affect its prior user status if the mark was used first in the global market. [See Milmet Oftho Industries & Ors. vs. Allergan Incorporated [2004 (12) SCC 624]. However, from the ruling of the apex court in Prius Auto case it appears as if the ratio of Milmet Oftho has been considerably downplayed, giving prior registration in India prominence over the principle of ‘first in the world market’. Indian courts have on other occasions as well denied registration of marks on the ground of bad faith even if the opposing party did not have a presence in India, for example registration of the mark “PANADOL” was denied in the case of Winthrop Products Inc. v. Eupharma Laboratories Ltd. [1998 (18) PTC 213 (Bom).
The decision, as it reads now in Prius Auto case, may cause nightmare to the foreign companies and bring unwarranted results for them. These companies may be those who are well known in India but may not be operating in India or they deal in specialized goods targeting a small group of consumers. Conclusively, the judgement delivered in the Prius Auto case suggests that a settled principle has been converted into a grey area of law. Thus, the dust will only settle once the apex court confirms or clarifies its stance on the burning issue of “Bad Faith Filings.”
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I: Understanding Plain Packaging:
The recent WTO ruling upholding Australia’s right to standardize packaging of tobacco products has not only struck fear in the hearts of tobacco companies but has also forayed into plain packaging laws and, the role they play in balancing intellectual property rights and public interest and safety. Simply put, the act of displacing distinctive and appealing packing of tobacco products with homogenous design dominated mostly by pictorial and textual warnings related to the ill-effects of tobacco consumption, is called plain packaging. Countries such as Ireland and the UK have also made headway in consciously limiting the exercising of intellectual property rights of the proprietors of ‘disfavoured’ products. Imputing the lessons from such progressive perspectives into the Indian paradigm will be difficult, but not impossible as the judicial and legislative back and forth in India has offered substantial clarification.
II: The Development of Tobacco Legislation:
India has over 100 million tobacco users with almost one in three adults admitting to having used it regularly. In an effort to curb the tobacco epidemic, the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (“COTPA”) and the Cigarettes and other Tobacco Products (Packaging and Labelling) Rules, 2008 were introduced. However, the fundamental regulatory purpose of the legislation was being vitiated through the sale of tobacco products in attractive packaging. It was also directed by the Supreme Court, having received no response till date, to the Ministry of Health, pursuant to a PIL being filed in 2016, that delaying the implementation of plain packaging was in violation of the rights of the citizens under Articles 14 and 21 of the Constitution.
Conversely, with a noticeable decrease in tobacco consumption of 3 percent in Australia post the introduction of plain packaging laws in 2011, and with Brazil finding success by removing descriptors from the plain packs that further decreased the ratings of appeal, taste and smoothness, and associations with positive attributes, certain changes were required to be made to reassert the importance of health over commerce in India.
To that end, Article 3(1)(b) of the above Rules was altered in 2014 to increase the size of the health warning on the principle display area from 40% to 85%, along with printing of manufacture details and the prohibition of brand promotion. After all, Article 47 of the Constitution vested a duty with the state to raise the level of nutrition and standard of living to improve public health.
III: Role of the Judiciary: Constitutional Considerations
The amendment was challenged in the Karnataka High Court in 2017 as being violative of Section 28 of Trade Marks Act, 1999, Article 14 and Article 19(1)(g) which refers to exclusive right of trademarks, right to equality and right to business, respectively. Since the State could not establish the inadequacy of the previous 40% requirement with empirical data, the reason for uniform applicability for all tobacco products having different packaging schemes and the requisite balance between a proprietor’s trademark rights and public health concerns, it was held to have a detrimental, unjustified impact on business in a discriminatory manner that caused unfair limitation of intellectual property rights, and consequently struck down. Moreover, Article 11 of the Framework Convention on Tobacco Control (FCTC) also recommended the introduction of warning labels for 50% of the packet cover, so it seemed prima facie that there was no meaningful objective that was being accomplished.
However, in Health For Millions Trust vs Union Of India, the Supreme Court stayed the High Court’s order and reinstated the 85% requirement as it not only viewed that as a reasonable restriction on Article 19(1)(g) but also that a policy based decision on the health risks posed to citizens could not be struck down, simply for the want of empirical data. Instead of hinging on the rationale behind the numerical increase, it subscribed to the view that any display warning below 85% did not adequately inform and safeguard the health of the consumers. Business and Intellectual Property considerations fell flat when there existed a need to prevent the desensitisation of products causing the “destruction of health”. The Trademark argument was also handled internationally with the UK arguing that as a negative right, limitation of the trademark did not withhold the rights of the proprietor and, Australia debunked the claim that it was seizing the intellectual property of tobacco companies by pointing out that there was an proprietary benefit to the Commonwealth that would amount to an acquisition.
IV: Problems with Plain Packaging
India took a step in the right direction by intervening on behalf of Australia in the WTO dispute. However, cost-effective tobacco control mechanisms aren’t free of concerns as it makes it harder to control the entry of counterfeit products, strengthening the possibility of plain packaging doom for other disfavoured industries such as soda and alcohol, limits the ability to exercise copyright and trademark rights for tobacco companies to just on paper, increases the attractiveness of tobacco consumption that stems from the appeal often associated with experimenting with the illicit and the forbidden, might usher in a brutal price war as a distinguishable factor to increase consumption and, almost 75% of all cigarettes in India are sold loosely, thus minimizing interaction with the homogenous packing. Over 14% of all consumed tobacco was illegal in 2013 in Australia, highlighting the potential for adverse consequences.
While it is hard to truly gauge at the effectiveness of policies on behalf of public health, it is an established fact that tobacco consumption increases the incidence of various forms of cancer. Intellectual Property and Commerce can only be afforded protection when the health of the individuals participating in such spheres have been assured. However, the pros and cons must be analysed and an enlightened collaborative approach must be taken by the branches of the government to ensure maximum positive impact to the parties involved from standardized packaging.
E-commerce has become a haven for the counterfeiters to make unlawful profits by deceiving consumers across the globe. Counterfeits have become one of the biggest economic issues of this era. By 2022, the value of counterfeit and pirated goods is predicted to grow to $2.8 trillion and cost 5.4 million jobs. It has brutally dented the business relationships among producers, intermediaries and the consumers. China has historically been known as the global factory of counterfeits. Therefore, it does not come as a surprise that a Chinese multinational e-commerce giant has consistently been in the headlines for its involvement in the mass distribution of fakes.
Alibaba- “the notorious market”
Alibaba, an e-commerce giant has always been on the radar of law enforcement authorities because of its involvement, intentional or unintentional, in distribution of counterfeit products. In 2014, Ni Liang, Senior Director of the Security Department for Alibaba Group, presented a paper on Alibaba.com’s IP protection practices at the Ninth meeting of the WIPO Advisory Committee on Enforcement in Geneva, Switzerland. Mr. Liang boasted about his company’s efforts in curbing piracy which includes a voluminous expenditure of more than 100 million Yuan each year in order to fight inferior and counterfeit products. The company has established a task force comprising of 5,000-strong professional IP protection team, staff from relevant departments and online volunteers. Alibaba has also come up with an intellectual property protection platform- AliProtect. As claimed on their official website, AliProtect strives to provide a platform for right holders and their agents to enforce intellectual property rights efficiently.
Ironically, since 2016 the U.S. Trade Representative (USTR) has put Alibaba’s Taobao on its blacklist over suspected counterfeits sold on the shopping platform. Tabao has been classified as “Notorious Market”, a designation for the world’s biggest violators of IP, trademark, and copyright law. The action has obviously outraged Alibaba as is evident from the statement of the Group President, Michael Evans- “In light of all this, it’s clear that no matter how much action we take and progress we make, the USTR is not actually interested in seeing tangible results.”
A Growing Parasitical Economy in India: Challenges Ahead
Cyberspace involves extraordinary complexities and challenges when it comes to its regulation. It cannot be disputed that law enforcement agencies of most countries are not equipped and trained to deal with cybercrimes including online piracy. Jurisdictional issues bring with them legal challenges for law enforcement agencies as the violators of IP, trademark, and copyright laws, operate trans-nationally. Hence, a preliminary issue is always on the table to be deliberated upon.
India is among those countries which are at the receiving end as far as parallel market of fakes is concerned. According to a report in RedSeer, a market research firm, the Indian e-commerce industry lost USD 3.4 billion in Gross Merchandise Volume (GMV) due to product returns in 2017. According to a survey conducted in India by LocalCircles, 12% consumers said that they had received counterfeit products on Snapdeal, while 11% said Amazon and 6% cited Flipkart.
India’s business is booming better than ever before in e-commerce sector and it brings with it an opportunity for India’s young entrepreneurs to access global markets and consumers in a faster and cost effective way. However, the scourge of piracy has belittled this opportunity. Consumers do not have unconditional faith on e-commerce platforms anymore and one of the responsible factors for the deteriorating business relations is- lack of action on the part of regulators. Therefore, the regulatory authorities need to take a stringent approach to curb the menace of online piracy. If not done so, young and developing businesses in countries like India will incur irreparable damage.