Supreme Court Stays Controller General of Patents, Designs and Trademarks Guideline Dated 18.05.2020 and 20.05.2020

The Delhi High Court, by virtue of the order dated 21st May 2020 in the case of Intellectual Property Attorney Association (IPAA) and Anr vs The Controller General of Patents, Designs and Trade Marks and Anr. the Plaintiff seeked to quash the Public Notice dated 18.05.2020 passed by the Respondent, and thereby restrain them from acting on it, and further, sought direction from the Respondent No. 1 to issue a Clarificatory Notice for all IP statuses, in compliance of the Order passed by the Supreme Court on 23.03.2020 in Suo Moto, Writ Petition (Civil) No. 3/2020.

The Petitioner has placed reliance upon the order given by the Supreme Court on 23.3.2020, which was directed keeping in view the current pandemic, that the period of limitations in all proceedings, irrespective of the limitation prescribed under the General Laws and Special Laws, whether condonable or not, shall stand extended, with effect from 15.03.2020, and last until further orders passed by the Supreme Court.

The Petitioner claims that in contradiction, the Respondent passed a new guideline dated 04.05.2020, which starts the limitation period from 25th March 2020 and extends the limitation period only until 18.05.2020, i.e. one day after the expiry if the current Lockdown period.

The Petitioner contends that as per the Supreme Court’s Orders:

1. The protection period of limitation under general and special laws is triggered from the 15.03.2020 and not the 25.03.2020

2. The fixture of the cut-off date as 18.05.2020 for the completion of various act/proceedings, filings, payment of fees, etc. in the matter of any IP litigation is both against the Supreme Court’s order dated 23.03.2020 and also a burden on litigants as well as their advocates.

3. Merely because a skeletal staff is now working in various IP offices, under the administrative control of the Respondent, it cannot lea to a conclusion that the lockdown has ended, and hence by not extending that timelines expiring on 18.05.2020 and thereafter, the Respondent has put the Litigants and Attorneys in a jeopardy by forcing them to move out of their houses and file opposition/counter statements/evidences etc. at the IP offices in order to avoid the application, opposition, rectifications being abandoned. Even the extension of limitation between 15.03.2020 and 17.05.2020 to any outer timeline of 01.06.2020 is placing enormous burden on the stakeholder, as the window is too narrow.

The Counsel for the Respondent, in his defence submits that the petitions (without fee) under Rule 6 (6) of the Patent Rules have been provisioned through e-filing mode and it is also to be notified that delay in transmitting or re-submitting documents to the Patent Office may be condoned/timeline be extended by the Controller General on a Petition made in that respect.

The Court held that:

1. No Court, Tribunal or any authority can act in contradiction to the Order of the Supreme Court dated 23.03.2020, which has been passed in exercise of the Supreme Court’s powers under Article 141 and 142 of the Constitution.

2. Under Article 144 of the Constitution, all authorities, whether civil or judicial, located within the territory of India, are required to act in accordance to the Orders passed by the Supreme Court of India.

Therefore, in conclusion, via Oder dated 21.05.2020 the Court held that the best course forward would be to suspend operations of the public notice dated 18.05.2020 and 20.05.2020, as well as directed the Respondents to act in accordance to the Supreme Court notice dated 23.03.2020. Hence, the Respondent No. 1 was directed to file and affidavit within a period of two weeks, in response to the present application. The matter is next listed on 17.06.2020.

References:

[1] https://www.iiprd.com/wp-content/uploads/2020/05/Order-21-May-2020.pdf

Domain Name: Indian ASP Ect And Dispute Resolution Procedure

INTRODUCTION

Domain name is defined by Merriam-Webster as a sequence of usually alphanumeric characters that specifies a group of online resources (as of a particular company or person) and that forms part of the corresponding Internet addresses.

The Domain Name System (DNS) helps you find your way around the Internet. Feature of DNS names is their hierarchical structure. This is reflected in the anatomy of the domain name[1].

For example, the domain name “whois.icann.org” has three levels of hierarchy: “org” is the top-level, “icann” is the second-level, and “whois” is the third-level.

As seen by users, each level of the hierarchy is separated by a dot. At each dot, management authority, that is, the ability to create, edit, or remove names within that level or below, can be assigned or delegated to another party. Continuing to use “whois.icann.org” as an example:

  • The ICANN community sets the rules for creating, editing, or removing top-level domains;
  • The organization that operates the “org” top-level domain sets the rules for registering domain names within “org” (e.g., registration policy); and
  • The ICANN organization, which registered the “icann.org” name, sets the rules for domain names under “icann.org” and using those rules, creates the name “whois.icann.org”.

So, when you register a domain name, you are creating a new realm in the DNS and giving that realm a name, which is the domain name that you registered.

TRADEMARK INFRINGEMENT

As the trademark is for offline business dealings and transactions same is the domain name for online. Trademark is for the product of the company and the domain name is for the company on the internet and the virtual image of the business.

Benefits offered to the registered trademark and domain name :

  • Trademark protects the brand name whereas unauthorized use of domain is protected by the registered domain name. 
  • Trademark supports the face value of the brand while domain name helps increasing in the access value

For registering of the domain name as trademark the domain name should be unique and can be distinguished from the other company goods and services over internet.

The domain name should be unambiguous and different from all the well known name on the internet so that the same is not misleading, confusing and also should not be against the morality or public order.

If the domain name is found to be similar ,misleading and not unique  then such will be infringement of domain name trademark.

The dispute has arisen before the Supreme Court in Satyam Infoway Ltd Vs Siffynet Solution Pvt Ltd.[2]

FACTS: Satyam Infoway Ltd, a leading IT service company, incorporated in 1995 for doing business of software development, software solution and connected activities, registered several domain names like ‘http://www.sifynet’, ‘www.sifymall.com’, ‘www.sifyrealestate.com’ in June 1999 with ICANN and WIPO by coining the word ‘Sify’ by using elements of its corporate name  Satyam Infoway and therefore claimed wide reputation and goodwill in the name.

SIFY- Siffynet Solutions Pvt Ltd began doing business of network marketing in 2001 under the domain names, ‘www.siffynet.net’ and ‘www.siffynet.com’, having also registered its domain names with ICANN.

DISTRICT COURT- After becoming aware of Siffynet’s use of the name SIFFY, Satyam Infoway filed a suit before the City Civil Court Judge and obtained temporary injunction on the ground that it was the original user of the SIFY trademark.

HIGH COURT– the appeal from the district court’s order, the High Court of Karnataka reversed the district court’s order, saying that merely because Satyam Infoway was incorporated first and had earned goodwill in respect of domain name ‘Sify’, no order can be granted in its favour without considering where the balance of convenience lies. The High Court also found that there was no similarity between the two businesses, and hence there was no question of customers getting confused or misled. Satyam Infoway filed an appeal to the Supreme Court.

SUPREME COURT– The Supreme Court held that while the original role of a domain name was to provide an electronic address for businesses on the Internet, the Internet has developed from a mere means of communication to a mode of carrying on commercial activity, and acts as a business identifier. Thus, a domain name could qualify as services and be entitled to protection under section 2(z) of the Trade Marks Act. Furthermore, on the issue of passing off, the Supreme Court found that use of a similar domain name even for different services could result in confusing the consumers. The user may mistakenly access one domain name instead of another.

The Supreme Court allowed the appeal and confirmed the injunction order earlier granted by the district court.

DOMAIN NAME IN INDIA

The only one organization that protects domain name as trademark or services is  ICANN ( Internet Corporation for Assigned Names and Numbers).

In India the domain name can be grated protection under the provisions of Trademark Act 1999 and the registration is granted only when the domain name fulfill all requirements to be properly registered under the Act. Once the domain name is registered as trademark it will be having all the rights which are owned by the owners of the registered trademark or services.

In the case of Bigtree Entertainment v Brain Seed Sportainment held by the Delhi High Court:[3]

Facts: The Plaintiff operates a popular online ticketing platform known as bookmyshow. It has also secured registration in BOOKMYSHOW word marks and logos. The Defendant operates www.bookmysports.com, an online platform used for booking sporting venues and other sporting facilities. The suit was filed claiming infringement and passing off of the Plaintiff’s mark by the Defendant and asking for a permanent injunction restraining the same.

Held: The Hon’ble  court denied the Plaintiffs, interim injunction against the Defendant’s use of the domain bookmysports.com.

The court, considering that prefix BOOKMY of the Plaintiff’s trademark BOOKMYSHOW was descriptive, not an arbitrary coupling of words and the Plaintiff’s failure to prove that “BOOKMY” has acquired distinctiveness or secondary meaning, dismissed the application for interim injunction filed by the Plaintiffs.

Therefore, the domain name place a vital role for specially those business which are only online as the domain name serves as an important element in trade and any commercial activities. Hence it is essential to protect the domain name

 In the case of Global Car Group PWT Limited & Anr vs. Vienna Solution Private Limited

Facts: Complainant no. 1 is a registered proprietor and user of the trademark  “Cars 24” and domain name “Cars24.com” and the complainant is using the same domain name in various countries  . That the Complainant has been openly continuously and expensively using the mark “Cars24” as its trade name, corporate name, business name, trading style , trademark worldwide since its incorporation. That the complainant came to know in June 2017 that consumer are misguided and calling on the domain of the Respondent instead of calling on the contact number of Complainant no. 2.

That the Respondent said that they have registered their domain name “Cars24.in” on 3rd January 2007 and the Respondent also said that they are registered on register of company since January 20th 2006 and deals in IT solutions since its inceptions. In 2007 they entered into the business of second hand cars.

In the year 2001 the domain name of the complainant was put on sale and the complainant was not doing any business of sale, resale of second hand cars and that the said domain name “Cars24.com” was also on sale on 2003, 2004 and 2005. In the year 2007 till 2014 the complainant was in the business of digital camera and other things.

Further the Respondent is in the business of sale and purchase of second hand cars since 2007 and the complainant started their business of the same in the year 2014.

Held: The Hon’ble court said that the complainant was conducting business activities in India since 12.08.2015 under the domain name “Cars24.com” thought there domain name was registered in 2001 but there was no actual use of the domain name till 2005 and from 2007 to 2014 they were merely posting Ads of digital camera and not operating any legitimate website on it. On the other hand the court found from the website www.archive.org that the disputed domain name of the Respondent was continuously in operation w.e.f 2007.

The court said even though the complainant is a registered proprietor of the trademark “Cars24.com” since 2016 and using the same since 2015, it cannot prevent the respondent from using the disputed domain name which the respondent is using since 2007. Further as per the provision of section 34 of Trademark Act 1999, “proprietor of a trade mark does not have the right to prevent the use by another party of an identical or similar mark where that user commenced prior to the user or date of registration of the proprietor”

Therefore it was held that though the domain name of the Respondent is similar or identical to the registered trademark of the Complainant, it does not preclude the Respondent from using the same and that for the reason tribunal finds that the disputed domain name has not been registered and used in bad faith by Respondent under the policy.

GROUNDS FOR FILING COMPLAINT WITH THE .IN REGISTRY

  • If the  Registrant’s domain name is identical or confusing,  similar to a name, trademark or service mark in which the Complainant is having rights,
  • If the  Registrant has no rights or authorized interests in respect of the domain name:
  • If the Registrant’s domain name has been registered or is being used in bad faith.

PROCEDURE FOR FILING COMPLAINT FOR RECOVERING OF A DOMAIN NAME

Domain name which are registered under .IN DOMAIN NAME DISPUTE RESOLUTION POLICY (INDRP) can be recovered. Certain procedure and rules need to be followed for the same. The Rules and procedure are mentioned under INDRP.

Any person who thinks that someone else’s domain name is in conflict with his Intellectual property rights and that the other person has taken that domain name in bad faith then that person can file complaint under INDRP as per the rules and guidelines.

Nation Internet Exchange of India (NIXI) facilitates a ground for exchange of domestic Internet traffic. The .IN registry is a part of NIXI and maintains the .in domain name in India. 

INDRP have Rules and Procedure which needs to be followed and Once NIXI has received your request, and your filing fee, it will assign an arbitrator and you will receive additional communications.

All dispute shall be subject to the jurisdiction of Delhi courts only.

STEPS FOR FILING A COMPLAINT

Step1: Address

Anyone can file. Copies to be send:

 IN Registry

c/o NIXI (National Internet eXchange of India)

Regd. Off.: 6C,6D,6E Hansalaya Building
15, Barakhamba Road, New Delhi-110001 India
Tel.: +91-11-48202011,

Tel. : +91-11-48202000,

Fax: +91-11-48202013

E-Mail: registry@nixi.in

Or any other address that may be published on the Registry? website from time to time.

Step 2: Details in the Complaint

Three copies of  the complaint along with annexure should be send and same should be send by mail.

The complaint should incorporate the following details:

  • A request that the Complaint be submitted to arbitration in accordance with the Dispute Resolution Policy and the Rules framed thereunder,
  • Details of Name, postal and e-mail addresses, and the telephone and facsimile numbers of the Complainant.
  • Name of the Respondent and all information (including any postal and e-mail addresses and telephone and facsimile numbers) known to the Complainant regarding how to contact the Respondent including contact information based on any pre-Complaint dealings, to allow the .IN Registry to send the Complaint to the Respondent.
  • The domain name which is the subject of the Complaint;
  • Details of Registrant of Domain Name
  • The trademark(s) or service mark(s) on which the Complaint is based and, for each mark, describe the goods or services, if any, with which the mark is used. Also other goods and services with which complainant intends, at the time the complaint is submitted, to use the mark in the future;
  • describe, in accordance with the Domain Name Dispute Resolution Policy, the grounds on which the Complaint is made including,
  • Specify, in accordance with the Dispute Resolution Policy, the remedies sought;
  • Identify any other legal proceedings that have been commenced or terminated in connection with or relating to the domain name that is the subject of the Complaint;
  •  Conclude with the following statement followed by the signature of the Complainant or its authorized representative
  • Annex any documentary or other evidence, including a copy of the Policy applicable to the domain name in dispute and any trademark or service mark registration upon which the Complaint relies, together with a schedule indexing such evidence.

A separate Complaint is required to be filed for dispute relating to each domain name.

Step 3: Notification

  • If the complaint is in accordance with Dispute resolution policy and Rules of procedure and also on the receipt of the prescribed fee the .IN Registry shall forward the complain with 3 working days.
  • In three working days the complainant shall be notified for the defects and the complaint shall be given 5 working days to clear the deficiencies otherwise same shall be deemed as withdrawn.
  • That after the deficiencies being cleared the .In Registry shall appoint a Arbitrator from the list of arbitrator and will thereafter send the copies of complaint and documents to the Arbitrator and the Respondent.
  • The date of commencement of the arbitration proceeding shall be the date on which the Arbitrator issues notice to the Respondent as stipulated under Paragraph 5 (c) of these Rules of Procedure.

Step 5: Arbitrator

  • .IN Registry shall maintain the list of arbitrator and shall appoint an arbitrator within 5 working days once the defects are cleared.
  • Once the arbitrator is appointed the parties shall be notified.
  • The award shall be passed within 60 days of the proceeding. In exceptional circumstances this period may be extended by the Arbitrator maximum for 30 days. However, the Arbitrator shall give the reasons in writing for such extension.
  • Within 3 days from the receipt of the complaint the Arbitrator shall issue a notice to the Respondent.
  • The Arbitrator shall ensure that copies of all documents, replies, rejoinders, applications, orders passed from time to time be forwarded to .IN Registry immediately for its records and for maintaining the transparency in the proceedings.
  • The Arbitrator conducts the arbitration proceedings in accordance with the Arbitration & Conciliation Act 1996 and the IDRP and IDRP Policy and Rules. The Registrant is required to submit to the mandatory arbitration proceeding.

Step 6: Appeal to the award

  • Since the INDRP follows the Arbitration Proceedings in accordance with the Arbitration and Conciliation Act 1996, the appeal provisions contained in that Act will apply to the INDRP as well. This means that a person has 90 days to appeal the decision of the Arbitrator.

General:

  • Communication: No unilateral communication with the Arbitrator.  All communications between a Party and the Arbitrator, or between a Party and the .IN Registry shall be made in the manner prescribed in these Rules of Procedure.
  • Language : English . Any documents submitted in a language other than English shall be accompanied by a true copy of its translation in English.
  • In-Person Hearings: There shall be no in-person hearings (including hearings by teleconference, videoconference, and web conference), unless the Arbitrator determines, in his sole discretion and as an exceptional matter, that such a hearing is necessary for deciding the Complaint.
  • Fee: The Complainant shall pay to the .IN Registry the prescribed fee, in accordance with the .IN Registry’s schedule of fees, within the time and in the amount required. All cheques/drafts towards the . IN Registry administration charges and payment of the Arbitrator’s fee shall be drawn in favour of ‘NATIONAL INTERNET EXCHANGE OF INDIAaccompanied by an amount of Rs.30,000/- + Service Tax payable by way of Cheque or Demand Draft or Wire Transfer.
IN Registry’s
Administration Fee
10,000/-
Arbitrator’s Fee20,000/-
Total Amount30,000/- + GST (18%)
For personal hearing2,000/- + GST (18%) per hearing
Maximum TWO hearings

 **w.e.f. July 01, 2017 – 18% (GST)

Author: Paras Khurana, Senior Associate and IP Attorney at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at paras@khuranaandkhurana.com.

References:

[1] https://www.icann.org/resources/pages/about-domain-names-2018-08-30-en

[2] (2004) 6 SCC 145

[3] CS(COMM) 327/2016

Patent Box Regime in the UK

The Patent Box is a special corporate tax regime in which the patent revenues are taxed differently from other commercial revenues. This was first introduced in Ireland in the early 1970s wherein there was an absolute relief of tax from licenses that were patented in Ireland.

The United Kingdom introduced a Patent Box scheme in April, 2013 taxing qualifying Intellectual Property at a reduced rate of 10% rather than the normal corporate tax rate of 20%. The Patent Box in the UK is a tax incentive regime designed to encourage companies to keep and commercialize their patents and innovations by reducing the UK tax paid on those profits. The United Kingdom Government wished to support the high-value growth in UK public limited company through a competitive tax regime that supports UK R&D from conception to commercialization. The Patent Box forms a key part of this strategy by encouraging companies to retain and commercialize their patents and R&D in the UK. The companies willing to do so must elect into the Patent Box to apply the lower rate of corporation tax i.e. 10 percent. The regime is largely applied to patents but other medicinal and botanical innovations can also take advantage of this regime.

Who can benefit from this regime?

A company can use the Patent Box regime if:

  • It is liable to pay the corporation tax.
  • It makes a profit from exploiting patented inventions and innovations that qualify under this regime.
  • It either owns or has exclusive license in the patents.
  • It has taken qualifying development of the patents.
  • The Patent is granted by the UK Intellectual Property Office or the European Patent Office.
  • The Company is a member of the group of companies that worked in a particular invention, and has active ownership of the invention and take a significant role in managing its whole portfolio of patented inventions.

It is mandatory for the companies to elect into the Patent Box for acquiring benefits of the reduced rate of corporation tax. It shall be done within 2 years after the end of the accounting period in which the relevant profits and income arose. An election to the patent box can be made either in computations that should accompany the company’s Tax return or separately in writing, there is no special form of words for election in the patent box.

Income/Profit covered under this regime?

In order to qualify for the patent box regime, the company should be liable to UK corporation tax and should make profit by exploiting the qualifying patented inventions. The main income category is the sales income from the patented inventions. A product can have only one patented component to qualify within this regime. Apart from direct sales, the profits from patent licensing and royalties received, patents used in processes or services, invention rights sold, income from damages and infringements of the invention can also qualify within this regime. The concept of notional royalty (which is the appropriate percentage of the IP derived income) shall be taken into consideration while determining the sale of processes and services of the patented invention since this cannot be easily determined like the direct sales income. After the identification of the IP income in the patented inventions, relevant expenses are allocated appropriately. A series of calculations is then carried out to strip out profits from routine or marketing activities of the patented products to leave only residual profits that are derived from the underlying patented invention. All sales procured from a patented invention of a company which owns a UK or European patent (or exclusive rights to that patent) are basically included in the three fold patent box calculation steps:

  • Allocation of taxable profits to either a patent box stream or a non-patent box stream,
  • Routine Return deduction-deduct this by an element of normal profit
  • Reduce this for an element of profits relating to brand marketing asset return.

This results in Relevant Intellectual Property (IP) Profits on which the reduced patent box tax rate (10%) applies after a company-wide election has been made. This reduced tax profit incentivize business-houses to commercialize their patent rights and promote Research and Development (R&D).

Changes to the Patent Box regime in 2016

The Organization for Economic Cooperation and Development (OECD) identified this Patent Box system as a harmful tax practice.  In December 2015, in response to the harmful tax practice claim, the HMRC (Her Majesty’s Revenue and Customs) published drafted legislation to change the design of the patent box under the Finance Act to make it parallel with recommendations from the OECD. This reform was more prohibitive which made the companies review their plans to avail the benefits under the Patent Box regime. The reason for bringing the amended draft legislation was that the original legislation did not require a claimant for tax relief to carry out any R&D in the United Kingdom. The previous system was abused by a number of multinational companies who sought to take benefit of the system by relocating their tax domicile to the United Kingdom, prompting some EU states, to claim that the UK Patent Box scheme could provide scope for abusive tax avoidance practices.

The new updated regime that came into force in July 2016 introduces a ‘modified nexus approach’ by which the amount of tax relief available will depend on the extent to which the R&D leading to the patented invention was carried out in the United Kingdom. This modified system helps create necessary impediments for companies who outsource their R&D to other group of companies and avail benefit thereof. However, there is still scope of some of the R&D that may be outsourced or acquired, but the same has been capped at 30% of the qualifying expenditure only. The objective of this amended system is clear i.e. allowing the Patent Box to fulfill its intended purpose, incentivize innovative companies to develop new patented products in the United Kingdom more successfully, while also minimizing the opportunity for harmful tax avoidance.

The Patent Box tax relief calculations have always been complex, and even more so in the changes introduced in 2016. There has been an added complexity of the calculations, by introducing an obligation for every individual IP right (assets, patented products or product families) to be separately streamed, which means that a company with four patented products shall carry out four separate calculations, allocating income and expenses to each and also adding a new ‘Nexus Fraction’ to the calculations. This change has been made in order to link to Patent Box benefit more closely to a company’s R&D activities. The calculation is based on cumulative R&D expenditure made by the company. The resultant is then multiplied by the Relevant IP Profits as calculated under the existing rules for each type of IP. Additionally, in calculations in the new regime, companies will also need to ‘track and trace’ their R&D spent and map the data to their IP.

Since the new rules came into force in June, 2016, there are several companies that have already been elected into the old patent box regime and such companies who have entered into the old regime before 30 June 2016, can continue to be the subject of the benefits from the previous original regime and the old calculation methods for obtaining the 10% tax rate on Patent Box profits, until 30 June 2021. However, they are not spared from tracking and tracing their current R&D to their IP in light of the new rules. All the new IPs created after 30 June 2016 will be made subjected to the new rules, even if the company is already elected into the patent box under the previous rules. There is a potential scope of complexity because some companies may be making calculations under both the old and new rules. Starting from 2021, all companies will have to mandatory follow the new calculations regardless of the time they opted for election in the patent box regime.

Author: Sudhansu Sahoo, Legal Associate, at Khurana & Khurana, Advocates and IP Attorneys.  In case of any queries please contact/write back to us at sudhanshu@khuranaandkhurana.com.

Ex Parte Interim Orders: Ex Parte Relief

Justice delayed is justice denied. One need not be lawyer to understand the gravity of the legal maxim as this is Magna Carta of the Constitution of India. The problem of delay becomes graver when justice is to be imparted in a situation where a litigation is progressing after an ex parte injunction order, which is an exception to a basic legal principle ‘audi alteram partem’ which insists that ‘the other side should be heard’ or ‘Opportunity of being heard must be given to all’.

This post highlights the roadblocks faced by a Defendant in his attempt to get an ex parte injunction vacated, judgments wherein the Hon’ble court has itself addressed the issue of difficulty in vacation of ex parte interim injunctions and how delaying tactics used by the aggrieved parties work as a tool against the defendants and paralyze them, eventually leading them to give in to inequitable negotiations. Order XXXIX Rule 3A , CPCstates that once an ex-parte injunction is granted by authority then in such scenario, trial court must endeavour to expeditiously dispose of the injunction application and the period for the same as provided by the statute is 30 days. 

As observed in case of n Microsoft Corporation v. Dhiren Gopal and Ors., [2010 (42) PTC 1 (Del)], the judge himself was of the opinion that once an ex-parte injunction is granted by the Court after that an ex-parte injunction vacated or a decision on the application on merits by the court becomes a Herculean task for the other party. It has become a routine process. Under Order 39 Rules 1 and 2 CPC, deciding applications on merits after hearing the parties in such cases is a rare phenomenon. Except this, excuses are used to seek adjournments once a party gets ex parte injunction.

Intellectual Property law cases are especially plagued by the problem. Being property rights, the Plaintiffs deem it necessary for raids to be carried out to seize the allegedly infringing subject matter, and hence, demand an ex parte order to enable a raid without a notice to the other party. What follows is a long battle to get an order of injunction vacated which turns out to be nothing less than a life sentence for the defendant party since the business suffers heavily due to the order. To provide for some relief to the contrary, it was observed in the case of Vinayakrao S. Desai vs Interlink Petroleum Ltd. And Ors., that under Article 226(3) of the Constitution of India defendants can file an application at any time for vacating interim orders, this can be done in a scenario of absence too. In short there is no bar or time-limit for vacating interim orders but it observed that the object of granting the injunction would be defeated by the delay. To overcome this situation a step must be taken wherein before granting an injunction, direct notice of the application shall be given to the opposite party.

The recent month long lockdown in India due to the Covid-19 virus is a manifestation of how serious the repercussions of inactivity can be on a small business. Liquidity seizes after a month, employees are unable to receive payment and hence, most of them have to be laid off. Such is the case in Kent Ro Systems Ltd. & Anr. Vs. Rajat Bansal & Anr., a case wherein the vacation of injunction application has been unheard for what has turned out to be more than a year. In compliance of the same, what is the effect? The Plaintiffs have almost received the relief which they were looking for, without the Defendants having given even a chance to be heard. The Defendants are forced to pump in more money in generating alternate revenues streams when their most basic one lies paralyzed with no way of revival in sight. The vacation of injunction application (under Order 39 (4)) which is supposed to give the Defendant a chance to be heard, merits delayed for various reasons without taking note of how urgent the application is for the mere survival of the company. The excuses range from not enough time to hear the matter when it comes up, instances wherein the hearing isn’t “possible” on a given day, instances wherein the matter goes unheard because the judge happens to be on leave or simply because the Plaintiff hasn’t produced the right product in court.

Except for the one above, there have been numerous cases wherein ex parte interim orders have been granted for unlimited or indefinite periods without restricting it to a time-limit, which proves to be a serious threat for all Defendants. For example in the case of Gurdev Singh J. in Hari Singh v. Mst. Dhanno [ (1962) 34 Pun LR 5] the court observed the period of three months to-have an ex parte order to get aside. This period of three months is to be reckoned from the date of the order and not from any other date moreover no importance given to Defendant regarding obtaining knowledge of the order, its immaterial whether he has knowledge for the same or not. This view was reiterated by the learned Judge in Smt. Parson Kaur v. Bakhshish Singh [(1970) AIR 1971 Punj 88]. In no scenarios is justice as denied to Defendants brought into question. The Legislature here did not intend to give indefinite periods of time for setting aside such an order. It’s purely based on circumstances of the case and hence, the time limit to be given in each case.

Supreme Court in Ramrameshwari Devi & Ors vs Nirmala Devi & Ors advised to limit the life of the ex parte order to seven days instead of thirty, to nullify the possibility that plaintiffs can benefit from the continuation of ex parte orders beyond their sell-by date, however, the same hasn’t been followed or even referenced in most ex parte injunction cases.

Enforcement of the Rameshwari case is needed in the present scenario for justice to be done. While granting an ex parte injunction, balance of convenience and irreparable loss are essentials, which is observed in the case of Stanley Mutual Fund v. Kartik Das [(1994) (4) SCC 255]. As observed by Supreme Court, in Sakiri Vasu Vs. State of U.P.,[(2008) 2 SCC 409] , that powe given to an authority always includes incidental as well as implied powers so that it would lead to justice for all. Every power and every control, the denial of which would render the grant itself ineffective. In other words court has power in view of Ex-parte injunction and relief which must not be used against Defendants.

Sometimes ex-parte injunction/ order are essential to protect rights/goods and services. In case of Munish Kumar Singla Trading As Chakshu Food Products Versus Jollibee Foods Corporation [LNIND 2017 DEL 4717], it was observed that in Intellectual Property Rights (IPR) matters ex-parte injunction is needed to protect rights of parties. Otherwise relief prayed for in the suit would become pointless. This will lead to the impugned goods being effectively counterfeit goods.

The Supreme Court in case of Venkatasubbiah Naidu vs. S. Chellappan and Others [(2000) 7 SCC 695], observed that after grant of an ex-parte injunction it must be disposed off within 30 days, otherwise it will be recorded in the Annual Confidential Reports of the concerned officer. This would be very difficult because every court has thousands of matters.  In case of Milmet Oftho Industries and Others vs. Allergan Inc [(2004) 12 SCC 624], it was observed that a reasonable period notice should have been issued to the parties when the ex-parte injunction order  had been passed. Otherwise it can lead to a havoc.

The enforceability and validity of ex-parte decree is similar to bi-parte decree. Thirty days is the limitation period for filing an application for setting aside an ex-parte decree and where it is unable to do so, a reason must be given for inability. In case of Guwahati University vs Niharalal Bhattarcharjee [(1995) SCC (6) 731], it was observed that due to lack of sufficient time for appearance of the suit it was adjourned. Time is the essence of ex-parte order in such scenario knowledge of the day of hearing as well reasonable time to appear before the court is important.

The apex court is observe in case of Morgan Stanley Mutual Funds vs Kartick Das [(1994) 4 SCC 225], that even the ex- parte injunction granted by court should be for a limited period of time but some decisions of subordinate courts show that the decision of the apex court is not followed by them and an ex- parte order granted without any precondition of time for hearing is given. Interim orders have not just a binding force but it must be followed throughout the India for justice. It is observed that ex- parte injuction should be made for exceptional cases only with an absolute timeline for vacation hearings so as to not cause the Defendants any kind of prejudice.

Author: Niharika Sanadhya, Litigation Associate and Rachi Gupta, Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at paras@khuranaandkhurana.com.

Softwares Copyrightable Under The Indian Copy Right Act

Introduction

Computer instructions that tell the computer how to work is software. Software is an extremely sensitive creation for the creator. Software is at risk at every stage of its construction. There is a risk of the creation getting stolen, hacked or leaked. Once such a calamity happens the creation is compromised. The drawbacks of a software getting stolen , hacked or leaked can lead to a creators loss of revenue, loss of idea or even loss of ones business model in entirety . Within no time of its getting stolen , it could be multiplied 10 folds and the creation no longer remains unique.

However, imagine if you could stop the above by providing adequate protection to your creation and in return for your simple effort, enjoy uninterrupted branding and popularity in the market perpetually. Is “Legal Protection” in India that concrete or are there ways to circumvent the same. Does one need to combine legal regime and technological methods to protect software. For a deeper understanding let us examine further.

Understanding the law pertaining Copy Right

Copyright is a right given by the law to creators of literary, dramatic, musical and artistic works and producers of cinematograph films and sound recordings. In fact, it is a bundle of rights including, inter alia, rights of reproduction, communication to the public, adaptation and translation of the work.

By Amendment Act No. 38 of 1994, the Copy right Act was amended to incorporate “the computer programmes, tables and compilations including computer [database]” within the meaning of literary work. Subject to this incorporation all provisions applicable to general literary works became applicable to computer programmes as well.

In India, a copy right is granted to the author on creation of an original literary, dramatic, musical and artistic work automatically. But nevertheless, it is advisable to register the creation with the registrar of copyrights. This is done as the seal of the copyright office acts as conclusive admissible evidence in all courts of law without and a party under dispute may not be required to produce further proof or original contents. Section 48 of the Copyright Act states “Registration of Copyright to be prima facie evidence of particulars entered therein”.

For a copyright to subsist in India, the work must be original literary work and it must first be published in India, or if it is published outside India, the author at the date of Publication, must be a citizen of India. And in case of an unpublished work, the author must be a citizen of India or domiciled in India, at the date of making the work. One needs to understand that India is a signatory to several treaties and conventions. India is a signatory to the universal copyright convention, the Berne convention, the Phonogram convention and the World Trade Organization. Vide these conventions a copyright having foreign origin will also be a copyrighted literary work in india, provided the section 40-43 are satisfied, however, the protection granted to a work in India will be no longer than the period of protection granted   by the origin country. The laws governing such situations is covered under International Copy right order 1999 under which India is a signatory to the aforementioned conventions.

The Copy right act defined “communication to the public” as making any work or performance available for being seen or heard or otherwise enjoyed by the public directly or by means of display or diffusion other than by issuing physical copies of it, whether simultaneously or at places and times chosen individually, regardless of whether any member of the public actual sees, hears or otherwise enjoys the work or performance so made available. Now as an architect of the software, you must be wondering, whether you are required to publish code and programming in public? The answer is a simple no. Unlike a book, if a software code and programming is published, all the protection will automatically be lost. Hence all creators of software will derive their protection and strength from the fact that distribution of the software itself for the use of the public can said to be ‘communication to the public’.

The Technology

The scope of copyright protection in software in general extends to

  • screen displays
  • preparatory design material
  • object code, subject code
  • information stored on computer media.
  • Data base
  • Computer output
  • Programming language.

The aforesaid examples are a range of material that are subject to protection during the stage when the software is under development and once the software is fully developed , the code itself is subject to copyright protection. The copyright act has defined computer and computer programme both. By the simple reading of both the definitions it can be asserted that definitions of the same broadly covers different forms of software provided the software be in a machine readable form.  Computer Programs are useful to provide instructions to the computer to perform a specific task. These programs are written using programming languages. There are many programming languages, and the programmer can select a language to develop programs or software. Source Code and Object Code are two terms associated with programming. The difference between the Source Code and Object Code is that Source Code is a collection of computer instructions written using a human-readable programming language while Object Code is a sequence of statements in machine language, and is the output after the compiler or an assembler converts the Source Code. In simpler terms Source Code is in text form, human readable code and is generated by human or programmer. And Object Code  is in the form of binary numbers in machine readable formats and  is Generated by Compiler as an Output.

Example a software written in the format of a readable language such that C++, JAVA will become the source code. Further once the source code once is broken into machine language with the help of computer , this software is known as object code.

Software covered under the copyright protection law:

a. Source and Object Code: Article 10 of the TRIPS Agreement clarifies that software whether in source or objects code, are protected as ‘literary works’. Article 4 of the World Intellectual Property Organization, Copy Right Treaty 1996 and Copy Right Act 1956 all imply and reiterate that protection is extended to both source code and object code.

Initially software copy rights were granted only to source code leaving out the object code, however, gradually the trend is changing world wide. Now an object code that is derived from source code using a part of the computer, known as an assembler. The object code is therefore to be regarded as an adaption or reproduction of the source code. Since the source code is protected by copyright, the machine code will also be protected as an adaption[1] .

b. An Operating System Program and Application Program: All programmes such as Microsoft word, opera, music player will fall under the category of application programmes and windows,MAC OS fall under the category of Operating System. A computer in order to bring about a certain result makes no distinction between application programs and operating programs. Both the program tells the computer to do something. Since copy right protects only the instructions, it makes no difference that whether wither of the program will be accorded less copyright protection than the other, hence both kinds are registerable for protection.[2]

c. Lastly, a collection of input and output formats used by a computer is copyrightable.

Author: Vibhor Gupta, Senior Associate, at Khurana & Khurana, Advocates and IP Attorneys.  In case of any queries please contact/write back to us at vibhor@khuranaandkhurana.com.

References:

[1] Sega Enterprises Ltd.vs Richards

[2]Apple computer,inc vs. Franklin Computer Corp.

Family Trademark

INTRODUCTION

Intellectual Property is the most significant piece of advanced business. IP makes a sound challenge in the market; thus the producer and brokers build up their items all the more adequately. One such Intellectual property is Trademark. A trademark incorporates any word, name, image, or any mix, used , or expected to be used, in business to recognize and recognize the products of one producer or dealer from merchandise fabricated or sold by others and to show the wellspring of the products. So, a trademark is a brand name. Trademark is an imprint or image which is fit for recognizing the products or administrations of one from those of others. The proprietor of the Mark can forestall the utilization of comparable or indistinguishable marks by contenders if such checks can prompt perplexity. By this, comparative low-quality substitutes will be kept from supplanting great quality ones.

Trademark not only prevents business from unfair competition in market but also helps in protection of the goodwill which the business has created and developed with its products and services over a period of time. Trademark continues with the business even after the life of owner of trademark. Such Trademarks gets inherited to the family of the owner of trademark.

FAMILY TRADEMARK

Family trademarks are marks that are utilized by an individual for his family businesses, where the trademark possession lies with every individual from the family. Many trademark suits which are documented concerning family trademarks are generally sibling rivalries who want to cash upon the goodwill the trade name which has acquired through years of hard work of their ancestors.

Family trademarks are a gathering of trademarks that:

  • has common characteristics recognized by all,
  • that is distinctive and differentiating, and
  • that is utilized with the goal that the purchasing public perceives the regular trademark to demonstrate that the trademark proprietor is the basic root of the merchandise or administrations.

There are a couple of reasons to build up Family trademarks.

  • each progressive trademark reinforces the first or root brand.
  • each progressive trademark has increasingly prompt acknowledgment and uniqueness. The devouring open will all the more rapidly partner the products with the first brand and the group of trademarks.

Family Trademarks are about reinforcing a specific brand than making an approximately related gathering of trademarks. They can be an incredible method to reinforce and grow a brand if the proprietor gets them and their utilization.

DISPUTE RELATING TO FAMILY TRADEMARK

A dispute arises when an inherited Trademark gets divided between two or more family members who are separated. Each member claims to be the lawful owner of the trademark and hence a conflict arises to the use of trademark by such family members. The basic purpose of Trademark is to prevent the business from its competitors and prevent the uniqueness of goods and services provided. In such situation the question arises whether such distribution of inherited trademark among various Members of family will dilute the value of such inherited family trademark.

The courts in various cases have taken a view that all the family members of the owner of trademark possess lawful right to use the inherited trademark and no single heir or family member has an exclusive right to use such inherited trademark unless any contrary appears.[1]Such a view has been taken as there is no malafide intention of the any family member or heir to harm or to affect the business under the inherited trademark of family nor to deceive the people by using such an inherited family trademark.[2] All the heirs are the lawful owners of the trademark and no such right for trademark can be claimed by any of the family member against the other.[3] The apex court further held that the peace and tranquility of family in such cases must be maintained and family arrangement should not be disturbed as far as possible. The peace, amity and family harmony can be restored if the family arrangement is adhered to and respected.[4]

 WHAT CONSTITUTES “FAMILY”

The next question arises in such situation is what constitutes a family in the cases of inherited family trademark who are entitled and are lawful owner of such inherited family trademark. The court in the case of Kale & Ors. Vs. Deputy Director of Consolidation and Others held that the term “family” has to be understood in a wider sense so as to include within its fold not only close relations or legal heirs but even those persons who may have some sort of antecedent title, a semblance of a claim or even if they have a spes successions so that the future disputes are sealed forever and the family instead of fighting claims inter se and wasting time, money and energy on such fruitless or futile litigation is able to devote its attention to more constructive work in the larger interest of the society. Further, any dispute arising out of inherited family trademark must be seen as a family dispute rather than a Trademark dispute.

CONDITIONS WHEN TRADEMARK NOT GETS TRANSFERRED

Distribution of Inherited family trademark takes a different route where the family members are rivals of each other, in such cases joint ownership is impermissible and injunction should be granted.[5]The court held that the joint proprietors must use the trademark jointly for the benefit of all. It cannot be used in rivalry and in competition with each other.[6]

CONCLUSION

Hence, in situations regarding distribution of trademark between family members, such trademark is open to use for all the family members but such trademark must not be used as a competition against each other and must be used with a bonafide intention to grab the each and every opportunity created by use of such Trademark.

Author: Akhil Goyal, student of  Chanakya National Law University, intern at IP and Legal Filings and can be reached at support@ipandlegalfilings.com

References:

[1]Narasus’s Coffee Company Vs Narasu’s Roller Floru Mill

[2]SRF Foundation v Shri Ram Education Trust [(2016)182PLR3].

[3]Sri Krishna Sweets Pvt. Ltd. vs Mr.M.Murali

[4]Rajni Dua & Ors. Vs. Bhushan Kumar & Ors., (1998) VI AD Delhi.

[5]M/s.Power Control Applianc & Ors. vs. Sumeet Machines Pvt. Ltd., (1994) 2 SCC 448

[6]M/s.Power Control Applianc & Ors. vs. Sumeet Machines Pvt. Ltd., (1994) 2 SCC 448

Novelty & Non- Obviousness as Concepts of Patent

The fundamental principle of Patent Law in India is that a patent is always granted for an invention, which is novel, new, non-obvious and useful. Inventive step without novelty is myth.[1]

Novelty and Non – obviousness are the criteria which provides different functions and add to different characteristics of intellectual product. Novelty is needed for a patent claim to be patentable and to rearrange the concept in the intellectual property. The basic aim for novelty and originality is to get preserved just like nonregistered designs.[2] For a patent primary novelty and obviousness is key concept and an invention will not be part of it because invention is not new and its already known to the public, that is why the aim of the novelty requirement under patent laws is to prevent prior art from being patented gain [3] or it has not fallen in public domain or that it does not form part of the state of the art.

An “Invention” is defined as a new product, activity or process involved with an inventive step and which is capable of industrial application and its one of the prerequisites for granting of a patent. Normally patent is related with monopoly over the invention of the party so that others can be stopped  from illegally using of that invention. The legal test behind the concept of novelty is that the invention must be something which possess “Novelty”. Novelty is absolute condition which is a reward for the contributors of an invention.

Invention is novel when it is not in a public domain as mentioned sections 2(1) (l) and 2(1) (j) of the Patents Act highlighted a ‘New invention’ in a following way: 

Any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of patent application with complete specification, i.e., the subject matter.”

In other words an invention is must be new or novel. Presently there is lack of cases which deals with novelty and non obviousness so Indian courts relied on the cases of other major jurisdictions. In India very few cases interpret the word obviousness. The concept for identifying prior publication is very important to observe novelty of a patent which was established in the case of Farbewerke Hoechst Aktiengesellschaft Vormals Meister Lucius v Unichem Laboratories[4]. Two basic feature for patent i.e Novelty and Utility is observed in the case of Lallubhai Chakubhai Jariwala v Chimanlal Chunilal and Co[5]  wherein it was observed that real test for patentability is novelty for patent and it’s essentials. In India the test of novelty is in inclusion with new inventions. Novelty is unused and unknown information which sets competitive advantage in a business field as a “sweet spot” for accessibility of patent.

Initially to prove that novelty exists then the necessary element is that it must fall under state of art. In India prior use of patent is part of prior art. The Indian Patent Act 1970 does not define “state of the art” but through various case laws we can refer that the state of the art means prior art, prior knowledge and prior use all of which would infringe the patentee’s claim if carried out and it will have been anticipated. State of art is defined under the English Law it has been defined as an invention which is comprise of all matter i.e. a product, process, information about either, or anything else, which has available to the public at any time before the priority date of invention either by written or oral description or in any other way. Moreover the concept of ‘state of art’ is result of European/English standards of novelty.[6]

The Novelty Test is very important for qualifying expertise in era of patents. This is for subject matter of invention which is based on essential features and comparing this set of features on the objects that are among the prior art.[7] Basically patent law centres round only two concepts one of them is novelty and other one is lack of obviousness. Any invention done by person is considered as art or novel in the light of the Section 2(1) (j), 13, 29, 30, 31, 32, 33, 34 of the Indian patent Act, 1970.

Patent publicly known or considered as prior act is not limited to published documents although it must be part of the common knowledge of public.[8] The novelty and non-obviousness of a patent must be observed and determined through ‘skilled in art’ because a skilled person has experience of the field in question and he must have the necessary information for the same. That is why the concept of ‘Novelty’ formulated as a uniform test for determination of inventive step as well as non-obviousness.

Obviousness consisting of four steps always which was observed in the case of Windsurfing International v Tabur Marine[9] and all these tests have been reiterated by the court in Bishwanth Prasad’s case. These steps are as follows-firstly identification of inventive steps is must in form of prior use, prior art or prior knowledge ; Secondly the difference is needed between known matter and alleged invention by the skilled person; Thirdly consideration is important to create or observe  differences to the aforesaid skilled person to the alleged invention and Fourthly to obtain the invention the degree of invention is needed. So novelty has been accepted by all the authorities as prerequisite of patentability.

In case of M/S Bishwanath Prasad Radhey Shyam Vs. M/S. Hindustan Metal Industries[10], it was held that there must be novelty in application. And also observed in case of Blakey and Co. v. Lathem and Co.[11]  is that to be new in patent only novelty or subject matter can show invention. Recently Delhi High Court observed the criteria of patentability as “Non-obviousness” and “Inventive- step.”  The US Supreme Court regarding the aspects of non-obviousness analysed three factors [12] known as Graham factors. These factors include the scope of the prior art; the differences between the prior art and the claims moreover ordinary skills too.

The concept of inventive step in India laid down by Supreme Court in case of  M/s. Bishwanath Prasad Radhey Shyam Appellant v. M/s. Hindustan Metal Industries [13] as the combination of new result. For patentability all the improvements or the combinations produce a new result/ new article. The U.S. Supreme Court in cases of  Swofford v. B & W, Inc[14] and Graver Tank & Mfg. Co v. Linde Air Prod. Co[15] observed that utility and novelty both are issues of fact which leads to determine the scope of judicial review in patent litigation.

Ordinary skill is always in pari materia with invention involved. In case of Inc v. Jeffrey Allan Industries[16]it was held that to determine ordinary skill we have to consider the type of problem encountered in the art, and prior art solution of such problems. An application without any inventive step was rejected by patent office.[17] In the case of  Bajaj v TVS[18] court observed that technology entailed in concerned patent is necessary for the closest prior art to understand that invention is obvious or not. IPAB dealt with inventive steps in case of Enercon (India) Ltd.v. Alloys Wobben  which is based on Halbury’s law of England which focuses on the test of inventive step as obvious to the person skilled in the art. All the above criteria stated that in many countries including India[19] the validity of a patent is based on three things  Invention, Novelty and Inventive step.[20]

Author: Rachi Gupta a student of B.B.A. L.L.B. (Hons.), Vivekananda Institute of Professional Studies, GGSIPU intern at IP and Legal Filings and can be reached at support@ipandlegalfilings.com

References:

[1] Natural Remedies Private Limited Bangalore  Vs. Indian Herbs Research & Supply Co & Others Lnind 2011 Kant 871.

[2] Zeki Geven, Novelty and Originality in Terms of Intellectual Property Law, 2 J. Fac. L. Inonu U. 327 (2011).

[3] Legal Research Service for the Boards of Appeal, European Patent Office, Case Law of the Boards of Appeal of the EPO (8th edition, July 2016).

[4] AIR 1969 Bom 255.

[5](1936) ILR 60 BOM 261.

[6]https://www.worldwidejournals.com/global-journal-for-research-analysis GJRA/recent_issues_pdf/2015/May/May_2015_1445945679__80.pdf.

[7] https://ipstyle.net/wp-content/uploads/2018/10/Patents.pdf.

[8] Monsanto v. Corommandal 1986 SCR (1) 120.

[9]  [1985] RPC 59.

[10] AIR 192 SC 1444.

[11] (1889) 6 RPC 184 (CA).

[12] Graham et al. v. John Deere Co. of  Kansas City et al 383 U.S. 1 (1966).

[13] AIR 1982 SC 1444.

[14] 393 U.S. 935 (1968).

[15] 339 U.S. 605 (1950).

[16] 807 F.2d 955, 962, 1 USPQ2d 1196, 1201.

[17] Reckitt & Colman of India Ltd. v. Godrej High care Ltd. (2001) PTC 367.

[18] MANU MIPR 2009 (2) 139.

[19] The Patents Act, 1970, s. 2(j).

[20] Office of the Controller General of Patents, Designs and Trade Marks, ‘The Guidelines for Examination of Computer Related Inventions (CRIs 2017) <http://www.ipindia.nic.in/writereaddata/Portal/Images/pdf/Rvised__Guidelines_for_Examination_of_Computer-related_Inventions_CRI__.pdf> accessed 6 February 2018.

Covid-19 & Competition Act Of India

About Competition

What does one understand by the word “Competition”? In common man’s language competition in the market would refer to rivalry between 2 entities selling similar products and/or services with the goal of achieving revenue, profit and market share. Thus it ensures that the entities involved with similar products compete on merits and not with the help of anti-competitive conduct and/or agreements. Such kind of competitive market structure does not flourish naturally but it needs to be promoted, protected and regulated by the Government with a competition policy. Such policy has to include not only ways and means of how to enhance competition in local and national markets but also focuses on anti-monopoly laws.

Competition In India

In India, competition policy has been implemented via the Competition Act, 2002 (referred to as “the Act”) which alongwith its amendment, establishes a Competition Commission Of India to prevent anti-competitive practices, promote and sustain competition, protect the interests of the consumers and ensure freedom of trade in the markets in India.

Thus, through the Act competition is encouraged in India and the Indian market protected from anti-competitive practises by regulating the following 3 areas:

  • prohibiting anti-competitive agreements,
  • prevent abuse of dominant position and
  • by regulating combinations i.e. mergers and acquisitions in such a manner that it does not have any adverse impact on competition in India, at the same time promoting freedom of trade as well as protecting the interests of consumers at large.

Abuse of Dominant Position

While effectively dealing with abuse of dominance, Competition Commission Of India has adopted a 3 way assessment model:

(i) determine relevant market share – in terms of the relevant product market and the relevant geographical market – factors relevant to be considered have been stated under Sections 19(7) [such as physical characteristics of goods, price, consumer preferences, existing specialized producers of said products, exclusion of in-house production classification of industrial products] and 19(6) [regulatory trade barriers, local requirements, national procurement policies, adequate distribution facilities, transport costs, language, consumer preference, need for secure or regular supplies or rapid after sales service]. respectively;

(ii) Assessment of the dominance – factors relevant for consideration have been stated in Section 19(4) of the Act;

(iii) Assessment of abusive conduct – the practices which have specifically been identified as being an abuse of dominant position have been identified under Section 4(2) of the Act which are as follows:

  • imposing unfair or discriminatory conditions on sale or purchase of goods/services, including predatory pricing;
  • limiting or restricting:
  • production of goods or provision of services of a market; or
  • technical or scientific development relating to goods or services to the prejudice of consumers;
  • indulging in practice or practices resulting in denial of market access, in any manner;

making the conclusion of contracts subject to acceptance by other parties of supplementary obligations, which, by their nature according to commercial usage, have no connection with the subject of such contracts; and using one’s dominant position in one relevant market to enter into or protect another  

Anti-Competitive Agreements

The Act deals with two kinds of anti-competitive agreements –  the Horizontal Agreements [Section 3(3)] and Vertical Agreements [Section 3(4)]. Horizontal Agreements are basically made between competing businesses to manipulate competition whereas Vertical Agreements are basically buyer-seller agreements – for eg. where a buyer/ retailer agrees to buy products from one manufacturer ‘X’ but in the agreement is restrained from buying from a competing manufacturer.

Section 3(3) of the Act deals with Horizontal Agreements  which are basically made at the same stage of production. Any agreement falling under categories mentioned under Section 3(3) of the Act would be held to be anti- competitive agreement which causes or is likely to cause an appreciable adverse effect on competition and thus are void agreements. These types of agreement are also known as cartel agreements and include the following:

  • price-fixing agreements, i.e., agreements between competitors, which directly or indirectly have the effect of fixing or determining purchase or sale prices;
  • agreements between competitors, which seek to limit or control production, supply or markets;
  • market-sharing agreements between competitors irrespective of the form that they may take; this includes market sharing by way of product allocation, allocation of geographic markets or source of production; and
  • bid-rigging agreements, i.e., agreements between competitors, which have the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the process of bidding.

Exception to a Horizontal Agreement being held to be anti-competitive under section 3(3) is a joint venture agreement – if such an agreement increases efficiency in production, supply, distributions, storage, acquisition or control of goods or provision of services [proviso to Section 3(3) of the Act]

Vertical Agreements [under Section 3(4) of the Act] on the other hand deals with agreements which are entered into between enterprises and/or persons who are at different stages of productions such as manufacturer-dealer/agents, manufacturers-raw material suppliers etc. Some of the agreements specified in the statute include:

  • Tie-in arrangement
  • Exclusive supply agreement
  • Exclusive distributorship agreement
  • Refusal to deal
  • Resale price maintenance

Regulation of Combinations

Section 5 & 6 of the Act deals with the combinations and regulation of these combinations. Thus, if any agreement is made to form a combination which causes an appreciable adverse effect on competition (AAEC) in the markets of India is completely void.

Competition & COVID-19

Due to the Covid-19 Pandemic, on 24th March 2020, the Government of India announced national lockdown for 21 days as social distancing is the only way out for dealing with the Corona virus disease. However, a day before such announcement, on 23rd March 2020[1] the Competition Commission of India had issued a notification whereby:

  • it adjourned all matters listed before it till 31st March 2020
  • suspended following till 31st march 2020
    • all filings in relation to Section 3 and 4 of the Act
    • all notification in relation to combination under Section 6 and 20 of the Act,
    • all other filing, submissions and proceeding under the Act and regulation made there under including those before the Director general
    • and pre filing consultations.

Thereafter CCI on 13th April, 2020[2] continued with suspension of all activities but allowed electronic filing of combination notices. Vide order dated 20th April, 2020[3], CCI continued with suspension of hearing of matters till 3rd May but allowed submission of information under section 3 and 4 as well as Combination notices electronically at the addresses mentioned in the notice.

With the national lockdown in place, all businesses were forced to shut down and the only activity permitted was what came within the realm of essential services/ commodities – such as grocery stores, chemists, banks (ATMs). Due to the nature of the virus that was the cause of such drastic steps being taken by countries all over the world, there was an immediate sharp increase in the demand for sanitisers and face masks all over the country. Seeing an opportunity to profit at the expense of the general public, in such times of crisis, companies/ entities manufacturing face masks and sanitisers arbitrarily increased, by manifold, prices of such essential products. . For instance, an N-95 mask which was originally sold for Rs.150/- each was now suddenly being offered at Rs. 500/- each.  Similar to the masks, even prices of hand sanitisers shot up through the roof – a 30 ml bottle which would normally cost between Rs.35-50/- was now being sold at Rs.999/-. Thus, prices of such  essential items were manipulated by the manufacturers to fill their pockets, at the health risk of innocent people at large. Infact, in an article that appeared in Economic Times on 5th March, 2020[4], it was reported that “As Covid-19 patients continue to rise in India, some retailers and mask manufacturers are cashing in on the virus terror by jacking up prices by 2 to 3 times”. Similarly, Business Today[5] vide its article published on 9th March 2020 also highlighted the plight of common man due to prices being hiked in respect of essential items like masks, sanitisers and medicines – sometimes prices being increased by 300%!!

As the demand of hand sanitizers and masks increased, the Ministry of Consumer Affair, Food and Public Distribution, in exercise of its powers under the Essential Commodities Act, 1955, issued a notification dated 13th March, 2020 whereby an order was passed directing “masks (2ply & 3ply surgical masks, N95 masks) & hand sanitizers” to be included in the Schedule as an essential commodity to enable the Government to regulate the production, quality, distribution, logistics of masks (2ply & 3ply surgical masks, N95 masks) & hand sanitizers (for COVID 19 management)[6]. Thereafter on 21st of March 2020[7], the Ministry of Consumer Affair, Food and Public Distribution issued another notification seeking to regulate the price of masks and hand sanitizers. Vide the said order, the Ministry directed as follows:

  • The retail prices of Melt Blown non-woven fabric used in manufacturing masks (2 ply and 3 ply) was ordered to be not more than the prices prevailing on 12.02.2020;
  • The retail prices of masks (3ply surgical mask) was directed to be not more than Rs.10 per piece and that of mask (2ply) shall not be more than Rs.8 per piece;
  • The retail prices of hand sanitizer was ordered to be not more that Rs. 100 per bottle of 200ml and for other quantities it was directed to be fixed in proportion of the prices fixed.

The said order was ordered to remain in force till 30th June, 2020.

In fact the situation was so grave that Supreme Court of India entertained a PIL filed by an NGO, Justice For Rights Foundation[8], whereby the Petitioner sought directions from the Supreme Court to the Government to ensure fair and equitable distribution of surgical/ N95 masks and also the sale and distribution of hand sanitizers and liquid soap and to make such items available to the public at large at reasonable prices. Hon’ble Supreme Court vide its order dated 3rd April, 2020 after taking into consideration the steps taken by the Government with regard to availability of surgical/ N95 masks and hand sanitisers at reasonable prices, disposed off the PIL.[9]

The Competition Commission of India also stepped in to issue an advisory to Business in times of Covid-19, aimed to serve as a deterrent to erring businesses indulging in rampant exorbitant increase in prices of certain essential commodities such as ventilators, face masks, gloves, sanitisers, medicines and essential services such as logistics, testing etc. Vide its advisory issued on 19th April, 2020[10] the CCI warned the businesses of various consequences under the Act that could be attracted due to the rampant exorbitant increase in prices of essential commodities – In the words of the Commission, “COVID – 19 has caused disruptions in supply chains, including those of critical healthcare products and other essential commodities/ services. To cope with significant changes in supply and demand patterns arising out of this extraordinary situation, businesses may need to coordinate certain activities, by way of sharing data on stock levels, timings of operation, sharing of distribution network and infrastructure, transport logistics ,R & D, production etc. to ensure continued supply and fair distribution of products.”

Vide the said advisory, CCI informed general public as well as business entities dealing with essential commodities of the various provisions of The Competition Act, 2020 prohibiting conduct that causes or is likely to cause an appreciable adverse effect on competition. It informed businesses of the provisions of Section 3(3), 19(3) of the Act which enables the Commission to conduct competition assessment and in that process it can have due regard, amongst others, to the accrual of benefits to consumers; improvement in production or distribution of goods or provision of services; and promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services. It further warned the business of CCI’s power to impose sanctions on business found guilty of violating the provisions of the Act and while considering such pleas, only such conduct of businesses which is necessary and proportionate to address concerns arising from COVID-19 will be considered. Thus it cautioned the businesses not to take advantage of Covid-19 to contravene any of the provisions of the Act.

CONCLUSION

That the companies involved in the business of the essential commodities should not indulge in the anti-competitive activities and refrain from arbitrarily and unnecessarily increasing prices of essential commodities, especially in times of such crisis being faced by the humanity all over the world – something which the mankind has not seen in this entire century. The Competition Act thus is another mode of keeping erring businesses in check so that essential commodities are made available to the public at large at reasonable and affordable prices, at the same also ensuring adequate supply of said products –which is the only way out for people to keep the spread of Corona virus in check.

Ending the present article on a positive note, it is important to refer to a news article dated 15.03.2020[11] published in ET Healthworld.com (From The Economic Times) which reported about a medical store in Kerala which was selling face masks for Rs.2/- only. The news reporting quoted the owner of the store as under:

“Nadheem, the co-owner of a surgical shop in Kochi, said: “We have sold around 5000 masks at Rs 2 each in two days. We decided to sell masks at a reasonable price especially to the common people like hospital staff and students.”

Author:  Aishani Singh, Litigation Associate at Khurana & Khurana Advocates & IP Attorneys. In case of any queries please contact/write back to us at aishani@khuranaandkhurana.com

References:

[1] https://www.cci.gov.in/sites/default/files/whats_newdocument/scan1.pdf

[2] https://www.cci.gov.in/sites/default/files/whats_newdocument/COVID-19.pdf

[3] https://www.cci.gov.in/sites/default/files/whats_newdocument/Notice20042020.pdf

[4] https://economictimes.indiatimes.com/industry/cons-products/fmcg/coronavirus-terror-in-india-sanitisers-masks-sold-out-prices-peak/articleshow/74487298.cms?from=mdr

[5] https://www.businesstoday.in/current/economy-politics/coronavirus-impact-what-expensive-whats-cheaper-india/story/397892.html

[6] https://consumeraffairs.nic.in/sites/default/files/file-uploads/essential-commodities-order/1087.pdf

[7] https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/Notification21mar2020.pdf

[8] https://main.sci.gov.in/supremecourt/2020/10792/10792_2020_0_2_21583_Order_01-Apr-2020.pdf

[9] https://main.sci.gov.in/supremecourt/2020/10792/10792_2020_0_7_21584_Order_03-Apr-2020.pdf

[10] https://www.cci.gov.in/sites/default/files/whats_newdocument/Advisory.pdf

[11] https://health.economictimes.indiatimes.com/news/industry/covid-19-medical-store-in-kerala-sells-face-masks-for-rs-2/74635843

Infringement Of Copyright Is A Bailable Offence Vis-À-Vis Section 63 Of The Copyright Act, 1957

In “State Govt. of NCT of Delhi vs. Naresh Kumar Garg” [1], the Hon’ble High Court of Delhi threw light upon the question as to whether the offence punishable under Section 63 of the Copyright Act, 1957 is bailable or non-bailable.

State Govt. of NCT of Delhi vs. Naresh Kumar Garg

Parties & Brief Facts:

The Case FIR No. 164/2011 was registered at Police Station Economic Offence Wing under Section 63 of the Copyright Act, 1957 read with Section 103/104 of the Trademarks Act, 1999. The Police raided the premises of one Mohd. Shokeen where huge quantity of the infringing material was seized by the police.

Mohd. Shokeen disclosed that the Respondent had supplied the infringing material. The Respondent was arrested and his application for anticipatory bail was dismissed on the premise that the offence under section 63 of the Act was bailable.

Petition under Section 482 of the Cr.P.C., 1973 was filed seeking an answer to the issue as mentioned below.

Issues:

Whether the offence punishable under Section 63 of the Copyright Act, 1957 is bailable or non-bailable?

Applicable rules:

Section 63, 64 of the Copyright Act, 1957.

Section 135 (1) (ii) of the Customs Act, 1962

Arguments

The Ld. State Counsel argued that wherever the imprisonment and also fine is provided for any offence it would be out of Item III of Part II of the Schedule I of the Code and would be cognizable and non-bailable.

Decision:

The Hon’ble Court referred the case of “Avinash Bhosale vs. Union of India” [2], wherein the Hon’ble Supreme Court held that an offence punishable under Section 135 (1) (ii) of the Customs Act, 1962 would be bailable.

Further, it went on to observe that for an offence under Section 135 of the Act, an imprisonment for a term of three years in addition to the fine can be imposed by the Court of the Magistrate trying the offence as is the case for an offence under Section 63 of the Copyright Act.

Similarly, in the case of “Amarnath Vyas vs. State of A.P. 2007”[3], the Hon’ble High Court of A.P. took the view that an offence under Section 63 of the Copyright Act is bailable.

The Hon’ble High Court of Delhi further observed that the interpretation of the Hon’ble Supreme Court in the case of Avinash Bhosale of the term, imprisonment which may extend to three years or with fine or with both which is for an offence under Section 135 (1) (ii) of the Act of 1962, will fully apply in a case under Section 63 of the Copyright Act.

The Hon’ble High Court further held that it would be fruitful to refer to the provision of Section 64 of the Act which empowers a police officer not below the rank of Sub-Inspector to seize the infringing copies of any work and observed that if the offence had been cognizable and non-bailable, there was no necessity to specifically authorise the police officer with the power of seizure.

The Petition being devoid of merit was dismissed by the Hon’ble High Court.

Author: Rajat Sabu, Senior Associate at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at rajat@khuranaandkhurana.com.

References:

[1] 2013(56) PTC 282 (Del)

[2] (2007) 14 SCC 325

[3] 2007 Crl. L. J. 2025

ALB IP Rankings 2020 – Announcement – May 2020

Khurana & Khurana, Advocates and IP Attorneys (K&K) has been ranked as “Tier 2” according to the Asian Legal Business ( ALB)  2020.

Khurana & Khurana has been one of the law firms to help India protect its IPR by providing Patent and trademark portfolio services, which includes Patent filing, Patent prosecution, Patent opposition, Trademark filing, Trademark prosecution, Trade opposition, IP enforcement as well as litigation.  This full service firm has, further contributed in improving India’s Patentability environment through filing a number of Patent applications.

K&K is a team of over 150 professionals spread across 10 Offices (New Delhi, NCR, Pune, Mumbai, Indore, Hyderabad, Bangalore, Punjab, Chennai ) in India, and has strong rankings from Legal 500, MIP, IAM, Chambers, Asia IP, Global 100, Rsg, Niti Aayog, WIPR Leaders, Global Venture, ACQ5 among others.

Our team of IP Attorneys/Practitioners, having high level of technical and legal competence, gives us the right competitive edge and positioning, as a law firm focused on creating immense IP value for our clients. K&K through its experienced and qualified team of Attorneys/Practitioners, across Technology and Legal Domains, gives a rare synergy of legal opinion, out-of-box thinking for protection of ideas/IP’s and entrepreneurial spirits to its client base.

In 2019 we were ranked as “Tier 2” for IPR services in IP list published by Asian Legal Business ( ALB) and In 2020 edition of Asian Legal Business again we are mark as tier two law firm for Trademark/ Copyright and patent.

Asian Legal business is leading source for intelligent information for business and professional. It is a Thomson Reuters publication providing legal industry news for the Asia-Pacific region.  With its portfolio of leading titles, online services, law awards and in-house legal summits, ALB provides authoritative and unbiased insights and unmatched networking and business development opportunities to legal professionals throughout the Asia-Pacific and the Middle East regions. 

ALB combines news and analysis from its team of professional legal journalists and the expert opinions of senior industry professionals with Reuters news and insights that power businesses across the globe. 

Asian Legal Business ranks law firms practicing in Asia according to complexity of work undertaken, key clients and visibility in the region, among other metrics.