Monthly Archives: January 2018

The Take of Supreme Court over Abuses, Falsehoods on Social Media

With a view to express opinion, belief and thought, every citizen of India is bestowed with the right of freedom of speech and expression guaranteed under Article 19 of the Indian Constitution. This right has been most distinguished in the matters where citizens have been able to raise voice against the unjust, express ideas freely and expose the discriminatory and corrupt practices of the government which nothing but intends to deceive people with malice and fraudulent practices. Running parallel are also the reasonable restrictions which can be imposed upon the citizens to protect the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.

Recently, there has been an expressed concern over abusive and derogatory comments on social media as uncharitable comments, trolls and aggressive reactions on almost every issue, including judges and judicial proceedings came under the scanner of the Supreme Court which expressed concern over it agreeing that regulating them was necessary and also opined that people doing so should face the consequences. In furtherance the apex court also disapproved and expressed anguish over a statement made by a senior advocate and former Supreme Court Bar Association President that most of the judges are pro-government. The issue mainly arose after Samajwadi Party leader Azam Khan termed the Bulandshahr gang rape act as “an outcome of political conspiracy”. Consequently a petition was filed against him in the apex court by the survivor’s family following his remarks. The court referred the matter to a constitution bench and said the larger bench would be at liberty to frame questions for adjudication, including the issue of social media. Emphasizing the need to regulate social media to restrain people from posting objectionable and abusive posts, senior advocates Fali Nariman and Harish Salve, who assisted the court as amicus curiae, narrated their own ugly experiences with trolls to a bench of Chief Justice Dipak Misra and Justices AM Khanwilkar and DY Chandrachud. The renowned counsels expressed the abusiveness faced on twitter handles and claimed that government functionaries so assorted to the mediums claimed that it was their personal view was in need of some urgent regulation. Justice Chandrachud, perhaps a follower of social media, expressed concern over the untamed online space stating that wrong information pertaining to even court proceedings were posted and circulated. The bench further added that one of the observations made during the hearing on the Rohingya matters was projected as if an order was delivered and it became a subject matter of debate.

Initially during the old times the right to privacy could be infringed by the state only, but in recent times it has emanated from private parties also. India, which is broadly a country of immigrants and many religions, castes, languages, ethnic groups, etc. needs to adopt essential measures for being united and ensuring prosperity along with tolerance and equal respect to all communities living in the nation. Majority population being illiterate and ignorant, the real question to the media is whether to lift up the intellectual level of our people by propagating rational and scientific ideas, or whether it should go down to that low level and seek to perpetuate it? A person’s reputation is linked to his fundamental right and that has to be respected by all is the universal principle that must be advocated by all.

Author: Mr. Diwadkar Sayali Manish, intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at anirudh@khuranaandkhurana.com.

References:

[1]https://timesofindia.indiatimes.com/india/sc-concerned-over-abuses-falsehoods-on-social-media-agrees-there-should-be-curbs/articleshow/60959972.cms

[2]http://www.thehindubusinessline.com/info-tech/social-media/abuse-of-social-media-platforms-comes-under-supreme-court-lens/article9889190.ece

[3]http://www.worldnews.easybranches.com/regions/india/sc-concerned-over-abuses-falsehoods-on-social-media-agrees-there-should-be-curbs-338137

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Viacom 18 Media Private Limited & Ors. Vs. Union of India & Ors.

“It should always be remembered that if intellectual prowess and natural or cultivated power of creation is interfered without the permissible facet of law, the concept of creativity paves the path of extinction; and when creativity dies, values of civilization corrode.”

Introduction

The cinema has always been a sphere of constant debate over the subject of freedom of speech and expression. In the recent years, the judiciary has witnessed various instances where the right to freedom of speech and expression of artists, filmmakers etc. was the subject of tussle. One such recent case is Viacom 18 Media Private Limited & Ors. vs. Union of India & Ors.[1]. which has created a lot of uproar in various sections of the society due to the huge controversy being associated with it. The Hon’ble Supreme Court of India once again faced the issue regarding Article 19(1) of the Constitution and the suspension of exhibition of a film under Section 6 of  the Cinematograph Act, 1952.

Background

The brief facts of the case are that Viacom 18 Media Private Limited (hereinafter, the “Petitioner 1”) filed a writ petition before the Hon’ble Supreme Court against the orders issued by 4 states, namely, Gujarat, Rajasthan, Madhya Pradesh and Haryana for imposing a ban upon the exhibition of the cinematograph film titled as “Padmaavat” (earlier “Padmavati”). The four states had issued the orders to ban the exhibition of the film in the interest of the public and to maintain law and order in the state.The Petitioner 1 is the official distributor of the film whereas, Bhansali Productions Pvt. Ltd. (hereinafter, the “Petitioner 2”) and Mr. (hereinafter, the “Petitioner 3”) are Producer and Director of the film, respectively.

The series of controversies started when Petitioner 3 started the shooting of the film in Jaipur in January 2017. The sets of the film were vandalised and heavily damaged along with Peitioner 3 and the crew being assaulted by the members of KarniSena (A Rajput cast group). The members of KarniSena protested against the objectionable scenes being shown in the film and also accused the Petitioners of distorting the history of Rani Padmini.

The crew members of the film were assaulted at several other occasions and also received threats from the members of KarniSena. In December 2017, the Central Board of Film Certification (hereinafter, the “CBFC”) reviewed the film with the help of examining committee and suggested five modifications to the film. Subsequently, the changes were made and CBFC granted a U/A certificate to the film and declared that the film is fit for public exhibition.

However, in January 2018, the protest by Karni Sena escalated and several states witnessed various incidents of vandalism and heavy damage to the public property by the members of KarniSena. As a result, the states of Gujarat, Rajasthan, Haryana and Madhya Pradesh issued orders to ban the exhibition of the film in theatres, public etc. to maintain law and order. A PIL was also filed before the Hon’ble Supreme Court to quash the certificate granted by the CBFC to Padmavat.

Analysis

The three-judge bench of the court headed by the Hon’ble Chief Justice, Mr. Dipak Misra ordered for the stay of notifications issued by the four states and also ordered to restrain other states from issuing notifications/orders which prohibited the exhibition of the film in any manner. The court also remarked that it was the obligation of the state to maintain the law and order.

The interim order of the Hon’ble court in the present case heavily relies upon the decision in Prakash Jha Productions & Anr. v. Union of India[2] where the Hon’ble Supreme Court dealt with a similar issue of suspension of a film (Aarakshan) from exhibition in public in the state of Uttar Pradesh.The Hon’ble court stated that the suspension of exhibition of a film in accordance with Section 6 of The Cinematograph Act, 1952 (hereinafter, the “Act”) cannot be ordered unless the film is publicly exhibited and there is likelihood of breach of peace. The court further stated that this is so because a thing can only be suspended if it is operational and not if it is yet to become operational. The Hon’ble court held the suspension to be set aside and the film to be publicly exhibited.

In the present case, the Hon’ble court emphasised upon the words “Suspension” and “being publicly exhibited” of Section 6 of the Act as interpreted in the case of Prakash Jha Productions[3]. The Hon’ble court stated that creative content is an essential aspect of the fundamental right enshrined under Article 19(1) of the Constitution of India and that the right is not an absolute right, thus, it is subjected to regulatory measures under Section 5B of the the Cinematograph Act, 1952 Act and to the guidelines issued by the Central Government.

The Hon’ble court held that once the board has granted certification to a film, the non-exhibition of the same by the States would be contrary to the provisions of the Act and also infringe the fundamental rights of the petitioners.

The Hon’ble court, while having due regard to the issue of right to freedom of speech and expression, placed reliance on its recent judgement in the case of NachiketaWalhekar v. Central Board of Film Certification & Anr.[4] decided on 16.11.2017 regarding a writ of Mandamus filed before the Hon’ble court to pass an order for the stay of nationwide release of a film (“An Insignificant Man”). The Hon’ble court had dismissed the Writ petition and stated that a film is a creation of art and an artist has his own freedom to express himself in a manner which is not prohibited by law. The Hon’ble court held that

Be it noted, a film or a drama or a novel or a book is a creation of art.  An artist has his own freedom to express himself in a manner which is not prohibited in law and such prohibitions are not read by implication to crucify the rights of expressive mind. The human history records that there are many authors who express their thoughts according to the choice of their words, phrases, expressions and also create characters who may look absolutely different than an ordinary man would conceive of.  A thought provoking film should never mean that it has to be didactic or in any way puritanical.  It can be expressive and provoking the conscious or the sub-conscious thoughts of the viewer.  If there has to be any limitation, that has to be as per the prescription in law.”

In the concluding paragraphs of the interim order, the Hon’ble court while referring to the above-mentioned decisions emphasised that it is paramount obligation of the State of maintain the law and order wherever the film is being exhibited in public. The Hon’ble court protected the right to freedom of speech and expression as enshrined under the Article 19(1) of the Constitution of India.

Conclusion

The Hon’ble Supreme Court of India has once again acted as a patron of right of expression of artists in the present case by staying the notifications/orders passed by the States. The interim order in the present case has set a milestone for creativity and intellectual talent. The legal position regarding the suspension of exhibition of a film was clear even before the present case due to the numerous precedents upon the same issue. However, in spite of such precedents and the legal position being clear, the film Padmaavat faced quite a lot of trouble due to the notifications/orders issued by the States. Furthermore, the Hon’ble Supreme court, in the present case, has reaffirmed the legal position regarding the staying of such notifications/orders thereby upholding the Rule of Law in such cases. The interim order in the present case is thus a boon for the artists and filmmakers as it supports idea of right to freedom of speech and expression.

Author: Mr. Harshit Dave, intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at anirudh@khuranaandkhurana.com.

References:

[1] Writ Petition(s)(Civil) No(s).36/2018

[2] (2011) 8 SCC 372

[3] Ibid

[4] W.P. (C) No. 1119 of 2017

The Disney-Fox Merger and Its Ramification

The Simpsons show has made a name for itself as a modern-day Nostradamus. 20 years ago, the show predicted Fox’s takeover by Disney. On 17th December, 2017, the Walt Disney Co. in a $52.4 billion, all-stock deal, made a bid to acquire 21st Century Fox and its entertainment and sports assets to augment their already asset-rich portfolio[1], causing fans of superhero blockbusters worldwide to cheer. However, the deal has several other ramifications on the entertainment industry, some of which the Author attempts to discuss here.

Disney’s motivations are clear enough; the media company is morphing into a goliath, and today, there exists no David capable of taking on Disney at its own game. Disney has been on the lookout to “buy either new character or businesses that are capable of creating great characters and great stories”[2]. The consequences of this merger are manifold. Firstly, and perhaps most obviously, Disney will own the rights to several successful and profitable titles, both TV-shows and movies. Several Marvel Studios properties that were sold off to Fox even before Marvel was bought by Disney will now return to Marvel (vicariously, through Disney). Secondly, Disney’s foray into broadcasting will be strengthened, as it now has more content to broadcast, and as it already owns the American Broadcasting Company (ABC) as a means to distribute their programming. Thirdly, Disney will acquire majority control over Hulu, the video-streaming company. Through expansion of Hulu’s activities worldwide, Disney can hope to take on the likes of Netflix and Amazon Prime, each of which have been steadily building up an extensive library of shows and movies to stream. Fourthly, Disney acquisition with Fox its highly-viewed channels such as National Geographic and FX will boost Disney’s advertising portfolio, by making Disney a one-stop-shop for advertisers[3]. Thus, this merger is not of two rivals coming together; it is instead, a consolidation of complementary behemoths, the merger nothing more than a marriage of convenience.

Disney’s current IP portfolio, after its merger with Fox, is the stuff of dreams. Having previously acquired Miramax, Pixar[4], Marvel[5] and Lucasfilm [6], Disney has established itself as the leader in marketable properties. Miramax’s influence in cinema has dwindled since the Weinstein brothers quit to start their own venture (which, given the recent sexual harassment scandal involving Harvey Weinstein, does not promise to be particularly long-lived), but has left behind several successful movie titles for Disney’s catalogue. Pixar has regularly been churning out heartfelt and commercially successful animated movies, including the Toy Story franchise, the Incredible, Cars, Monsters Inc. and Inside Out, to name a few. Marvel has been one of Disney’s most profitable purchases. Marvel’s Iron Man, Captain America and Thor, together with the ensemble Avengers films have become among the highest-grossing films of all time. Their ambitious Infinity War team-up has fans around the world breathless with excitement. Several of Marvel’s most popular titles and characters were sold off to Fox in Marvel’s dog days. The fan-favorite X-Men franchise and the original super-team, the Fantastic Four, now belong to Disney, and thus have returned to Marvel Studios. Lucasfilm, along with its special effects division has brought the Star Wars universe into Disney’s control. Fox owned the rights to broadcast, in perpetuity, some of the Star Wars movies, and now, these rights have reverted to Disney. These acquisitions make Disney poised to sit on top of the box-office, and also bring a sizable catalogue of content that Disney can stream on its own services, completely sidestepping Netflix, Amazon Prime and other streaming services.The most interesting consequence of the Disney-Fox merger is Hulu’s fate. Hulu has had a funny story. It is a joint venture, with the ownership shares as follows: Disney – 30%, Fox – 30%, Comcast – 30% and Time Warner – 10%[7]. After the Disney-Fox merger closes, Disney will become the majority shareholder of Hulu, and can effectively control it. It may even attempt to buy-out Comcast and Time Warner, and turn Hulu to a full-fledged subsidiary.

Currently, Hulu only offers services in the US, and in Japan. However, given Disney’s vast catalogue of content, Hulu’s services can be expanded world-wide, as a direct competitor to Netflix, Amazon Prime and other streaming services. Whereas Netflix and the others are tech-driven and have only recently forayed into producing shows and movies de-novo, Disney has been in the game for so long, and has perfected the art of producing commercial flicks. Bright, Netflix’s most ambitious project, a 90 million USD film starring Will Smith and Joel Edgerton opened to low viewer enthusiasm and negative reviews by critics. Contrast that to Disney’s recent movies – Thor: Ragnarok, Star Wars: the Last Jedi and Beauty and the Beast, which were all critically acclaimed, and commercially successful. Clearly, if Disney does manage to turn Hulu into its own streaming service, it will prove to be more than capable of taking on Netflix, Amazon Prime and other streaming services.

All these developments, of course, are subject to the merger being allowed by the United States Department of Justice Antitrust Division[8]. As this deal is a horizontal merger, i.e. a merger by which Disney aims to buy up a company that produces similar goods and services

(Fox), and will lead to a tangible reduction in the number of competitors; the deal is bound to be scrutinized with greater fervour. The deal would reduce the number of major film studios in Hollywood from six to five, and this have prompted concerns over both, the quality of future content, and the exploitation of auxiliary businesses by Disney, as it will negotiate from a position of absolute strength. Already, Disney is notorious for imposing unfairly high cuts from the share of movie revenue from theatres around the world. With their position consolidated, and their content highly sought-after, Disney will be in a position to dictate any terms they see fit onto theatres, producers, actors, and so on. The maxim, “Power corrupts, and absolute power corrupts absolutely” might seem trite, but is supremely relevant here. All- in-all the Disney-Fox merger is great business for Disney, but may not bode well for other players in the industry. The decision of the antitrust regulators will be gauged on and only after a very long drawn-out period of scrutiny only, can such a merger be allowed. The effects this merger will have can only be predicted by conjecture; the true effects will be seen only a few years into the future.

Author: Mr. Siddharth Doshi, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at anirudh@khuranaandkhurana.com.

References:
[1] https://www.businesswire.com/news/home/20171214005650/en/Walt-Disney-Company-Acquire-Twenty-First-Century-Fox
[2] “Disney Is Looking To Buy Even More Stables Of Characters”, Business Insider
[3] https://www.businessinsider.in/A-Disney-Fox-deal-is-not-just-about-Netflix-it-also-has-major-ad-sales-ramifications/articleshow/61963523.cms
[4] http://www.nytimes.com/2006/05/06/business/media/06pixar.html
[5] https://www.marketwatch.com/story/disney-to-acquire-marvel-entertainment-for-4b-2009-08-31
[6] https://www.theverge.com/2012/10/30/3577656/disney-buys-lucasfilm-plans-to-release-star-wars-episode-7-in-2015
[7] https://www.cbsnews.com/news/its-official-disney-joins-news-corp-nbcu-in-hulu-deal-includes-some-cable-nets/
[8] http://variety.com/2017/politics/news/disney-fox-deal-antitrust-enforcement-1202637338/

Know the Roster System

January 12th, 2017 is a date earmarked in judicial history, an event that witnessed four senior most sitting Judges of Supreme Court of India, publicly raising concerns about the structural flaws regarding the functioning of the administrative division of the Supreme Court. They put forth the complete responsibility upon the shoulders of Chief Justice of India regarding roster system of the Apex Court. In this article, we would make an attempt to gain better understanding and clarity regarding this roster system and about the controversy surrounding it.

The word ‘roster’ can trace its roots since early 18th century, where it was originally used in order to indicate the list of duties and leave for military personnel[1]. In the contemporary world, it is defined as a system to allocate different tasks to all the members in order to achieve higher efficiency.

Since this system allocates tasks to the group members, it has to be under control of some decision making authority. The issue starts when the decision making authority is also to be assigned tasks under that system. The issue is regarding the misuse of that authority of decision making for any reasons whatsoever.

After sufficiently discussing about the meaning of a roster system, let us link it back to the Supreme Court:

1. Firstly, the efficiency of the roster system. As on November 1st 2017, the Supreme Court still had 55,259 pending matters, 24.69% of which cannot be listed for ‘hearing’ before Honorable Although the situation has improved as compared with half a decade earlier, when on November 1st 2012, the Supreme Court had 64,931 pending matters, 62.10% of which could not be listed for ‘hearing before Honorable Court[2]. These reductions in pending cases signify that we need a more efficient procedure for allocation of cases in order to achieve higher utilization of workforce. Hence, better management roster system seems to be necessary.

2. Secondly, regarding the issue of the source that confers such power to a decision making According to the Supreme Court Rules, 2017[3]. Chapter V: Powers, Duties and Functions of the Registrar, Rule 29, expressly states that the Registrar shall prepare roster under the directions of the Chief Justice of India, andall such powers, duties and functions of the registrar are subjected to any further special or general orders of the Chief Justice of India. This power bestowed by the handbook upon the CJI has been reiterated in a separate chapter dedicated to Roster (Chapter VI). It has further been mentioned in Chapter XIII: Listing of Cases. Therefore, as per the rules, the Chief Justice of India has an absolute authority in this regard. Also, to strengthen the argument a step further, we can take into account the precedents that have been established by the Supreme Court Judgments and thereafter been considered as the ‘Law of the Land’. In the seminal judgment of State of Rajasthan v. Prakash Chand[4], paragraph 67 clearly defines that regarding the matters of the High Court, the Chief Justice is the master of the roster( point 2), and this precedent has been considered in the later judgment of Campaign for Judicial Authority and Reforms v. Union of India[5] where the court has reiterated it and extended the understanding of authority of Chief Justice of a High Court to be applicable to the Supreme Court and the Chief Justice of India as well.

3. Thirdly, the issue is regarding unrestricted use of roster system by the Chief Justice which is not accountable under Constitution or under Supreme Court rules. And the issue can be rectified only by the sitting Chief Justice of India as he has a direct authority over the formulation of the rules of the Supreme Court. And here there is conflict of interest as it does not make much sense for a person adorning the position of Chief Justice of India to take a step in order to formulate a rule that will restrict his/her own power in the end. Moreover, if any action by way of Constitutional Amendment is attempted by the Legislature, it is more likely to be taken as an interference of the legislature in the matters of the judiciary and is likely to be struck down as being against the basic structure doctrine[6].

Another viewpoint can also be formed that based on the existing system, before the event took place, one of the four sitting senior most Justices of the Supreme Court would most likely have become Chief justice of India after some time and can then also have played an instrumental role in bringing out the they desired. Other than public awareness, this event seemed to bring out something more that would be  constructive and tangible in nature.

Author: Mr. Madhur Tulsiani, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at anirudh@khuranaandkhurana.com.

References:

[1] https://en.oxforddictionaries.com/definition/roster

[2] http://supremecourtofindia.nic.in/statistics

[3] http://supremecourtofindia.nic.in/pdf/LU/ppop2017.pdf

[4] http://sci.gov.in/jonew/judis/13613.pdf

[5] (2018)1SCC196

[6] http://sci.gov.in/jonew/judis/29981.pdf

Abuse of Dominant Position in Aftermarkets and Other Support and Maintenance Markets in India

Introduction

The term ‘aftermarket’ is generally used in the automobile industry and it is generally a secondary market dealing in spare parts, accessories and other components for motor vehicles. It is also concerned with the service, maintenance and customization of vehicles in the automobile sector. The other support and maintenance markets involve kinds of services similar to the automobile aftermarkets but in different sectors with regards to different kinds of machines.

An enterprise which exercises control over an important input available in the secondary market associated with a particular product in the primary market will have an advantage over competitors in the market as the consumers may be dependent upon the enterprise for such input which might be any good or a service. This control might increase so much that it monopolizes the market and even greater degree of such control might result into exploitation of the consumers. Thus, any such excessive control which restricts the competitors or consumers and monopolize the market must be prohibited at the very outset.

Indian Position

The Competition Law in India deals with the aspects related to monopolization, abuse of dominance and anti-competitive behavior.

The substantive provisions related to abuse of dominant position has been encapsulated in Section 4 of the Competition Act. It can be determined in three steps that whether an enterprise is abusing its dominant position or not. The first step involves the determination of the market. The second step involves ascertaining that whether the business enterprise which is concerned is having a dominant influence which is of an alarming degree of power over the market which might turn into monopoly. The third stage is verifying whether the misconduct of the relevant business enterprise is compliant in accordance to the provisions of Competition Act or not. In crux, The provisions of the statute prohibit such conducts which aim at monopolizing the market.

Explanation (a) for section 4 of the Competition Act defines dominant position to mean “a position of strength enjoyed by an enterprise in a relevant market, which enables it to operate independently of competitive forces prevailing in the relevant market or affect its competitors or consumers or the relevant market in its favour.”

Section 19 of the Competition Act prescribes the various factors which must be determined in order to ascertain whether an enterprise is in a dominant position or not. Some of these factors include share and size of the enterprise; size and importance of the competitors in the market; economic power of the enterprise; dependence of consumers on the enterprise; market structure and size of market; social obligations; etc.

In Magnus Graphics v. Nilpeter India pvt. Ltd[1]., the Magnus Graphics (Informant) was a proprietorship firm engaged in the business of label printing at Muzaffarnagar, Uttar Pradesh and Nilpeter India pvt. Ltd. (Respondent No. 1) was engaged in the business of manufacturing, distribution, marketing, installation, and after sales services including training of operators of the Nilpeter brand of label printing machines in India. The informant purchased a Nilpeter brand of label printing machine FB-3300 Servo Flexo Printing Machine (machine) from the opposite party no. 1 for Rs. 2, 41, 11, 148/-

The Respondent no. 1 started denying support to the Informant in terms of service, spares and equipment sales in respect of Nilpeter Printing Machine, etc. after expiry of the warranty period and the informant applied before the competition commission to restrain the Respondents from abusing their dominant position in the market.

To examine the alleged abusive conduct of the Respondents No. 1, the Director General was appointed to investigate into the matter and as per his report, the market of “the servicing of Nilpeter FB 3300 Servo Flexo Printing Machine in the territory of India” was identified as the relevant market in the present case.

The issue which was discussed in this case was whether there were substitutable support and service providers present in the market at that time that could provide adequate service and maintenance to the informant when the Respondent no. 1 discontinued and withdrew to provide such service and support.

The replies of the competitors similar to that of the Respondent no. 1 were asked for by the commission and upon thorough examination, it came to a conclusion that such machines can be serviced by freelance engineers/ ISPs providing similar services and service parts were also available in the local market and the informant could have approached them when such service was denied by the Respondent no. 1. Therefore, it was held by the commission that there was no dominant position being held by the Respondent no. 1 and the question of dominance does not arise.

In ShamsherKataria v. Honda Siel Cars India Ltd.[2]an order was passed by the Competition Commission of India restricting 14 car manufacturers and imposing fine upon them with regards to the issues arising in the aftermarkets. The Original equipments manufacturers (OEM’s) have restricted the Original equipments suppliers (OES) by way of vertical agreements to sell the spare parts and other equipments in the open markets. Also, the OEM’s were not providing any technological information, diagnostic tools and software programs to the independent repairers in the local market which were necessarily required for the maintenance and service of the automobiles. Thus, by way of these practices they were charging high prices for such maintenance and service and such practices were held by the CCI to be amounting to denial of market access to the independent repair workshops in the market.

The CCI held that the arbitrary pricing and conduct of the enterprises is exploitative in nature and the consumers are largely getting affected by such conduct which amounts to abuse of their dominant position. The consumers were totally dependent on the OEM’s for servicing, repairs, or maintenance of their automobiles and did not have any substitutable remedy to resort to.

Position Abroad

In IBM mainframe maintenance case[3] of the European Union, the Competition Commission after conducting initial investigation of the aftermarket of the IBM mainframe computers came to a conclusion that IBM holds a dominant position in the market which includes certain inputs required to provide maintenance services for IBM mainframe hardwares. Also, it has abused such position by imposing unreasonable supply conditions to its competitors in the market and thus trying to monopolize the market.

In United States, the Kodak case which came in the year 1992 was a landmark decision in relation to the aftermarkets whereby the Kodak Company restricted its 17 agents who were providing maintenance and support services and urged the consumers to directly receive services from the Kodak Company and other authorized agents. It unilaterally stopped supplying the spare parts to the agents which it earlier used to provide. It was held by the Court that even when there was competition in the primary market, abuse or exploitation could occur in the secondary market after observing that the market for providing support and aftermarket services was different from the primary market in which Kodak sold its products.

In China, pursuant to the merger between the Epson Printers, the project distributors and the repair service providers, concerns were raised by the consumers that the aftermarket for secondary services have very low substitutability as the competition in the aftermarket was killed after this merger and all the support services were being provided under the head of a single company. It was held that there was no restriction to market access being imposed on other repair service providers and the spare parts were available in the market even after the merger.

Conclusion

Thus, the position related to abuse of dominant position in the aftermarkets is well settled in various countries and there is a clear distinction between the primary and the secondary market which has been observed in various cases. In India, although there are very less number of cases in this regard, but still the position has been settled by some of the cases and adequate remedy has been provided by the Competition Commission. Also, fine has been imposed on the defaulting parties. Conclusively, the major element which is necessary to be determined in ascertaining the dominance is the substitutability of products in the market and the dependence of the consumers on the enterprise.

Author:  Pratyush Rao, 5th year student at ILNU, Nirma University, intern at Khurana & Khurana, Advocates and IP Attorneys and can be reached at info@khuranaandkhurana.com.

 References:

[1]2015 Comp LR 93 (CCI)

[2]2014 Comp LR 1 (CCI)

[3]http://ec.europa.eu/competition/publications/cpn/2012_1_1_en.pdf

[4] http://www.cci.gov.in/sites/default/files/03201127.pdf

[5] https://one.oecd.org/document/DAF/COMP/WD(2017)1/en/pdf

[6] India: CCI Penalizes 14 Car Makers For Market Abuse And Vertical Restraints

[7] India: Abuse of Dominance

Amendments in Intellectual Property Laws in Vietnam

Much awaited fourth amendment to the IP laws of Vietnam finally comes into force today i.e. on January 15, 2018. Circular No. 16/2016/TT-BKHCN (also called Circular No. 16), which was issued on June 30, 2016 by the Ministry of Science and Technology of the Government of Vietnam  which amends as well as supplements a number of articles of Circular No. 01/2007/TT-BKHCN (also called Circular 01). The amended circular no. 16 is a critical guidance document for implementing of IP laws in Vietnam. These amendments as already discussed are effective from January 15, 2018.

The amended circular will have a major impact on the Intellectual Property practice  followed in Vietnam as it modifies almost 49 out of 67 points present in the currently followed circular no. 1. Further, these modifications will resolve certain issues and concerns and align the IP laws of Vietnam with International IP system. The modifications mostly apply on the examination procedures conducted by National Office of Intellectual Property (NOIP) of Vietnam related to Patents, Trademarks, copyrights, Designs and other IPR. These provisions will also create favorable conditions for applicants for obtaining IP rights in Vietnam.

Below mentioned are some of the important amendments and supplements provided by the Circular no. 16 related to examination process of Patents, Trademarks and Designs.

1. General Regulations

1.1 Office Action response timings: Point 13.6.a and Point 15.7.a.i (All these points are present in Circular no. 1)

  • The time frame to respond to an office action concerning Formality Examination will now be 2 months instead of 1 month.
  • The timeframe to respond to an office action concerning substantive examination will now be 3 months instead of 2 months.
  • The deadline for the payment of registration fee will be 3 months instead of 1 month.

These deadlines may once be extended for a similar period. These amendments to the   above mentioned deadlines seems to be a more practical time frame for the applicants as compared to previous practice.

1.2 Appeals and their settlements: Point 22.1.c
The amended circular no. 16, has specifically provided that addition of new facts/details in application will not be accepted at the appeal stage. However, on the request made by the Applicant or appellant, NOIP may reexamine such new facts/details.. The amended circular allows the appeals settlement body to seek opinions of independent experts if the appealed case has a degree of complexity.

1.3 Points 15.7.b and 9.3-5: Decisions on Refusal
In circular no. 16, on getting a decision of refusal after substantive examination, the applicants can overcome the same by submitting new facts/details which were not considered in the examination and the NOIP may consider withdrawing the decision of refusal. The applicants do not have to lodge an appeal against the decision of refusal.

There is an alternative for overcoming decisions of refusal that are issued after considering responses to office actions regarding substantive examination. Instead of lodging an appeal, if the applicant submits new details (which have not yet been considered in the examination) which can affect the examination results, the NOIP will consider withdrawing the decision on refusal. In previous circular it was not the case.

1.4 There are few more general regulations in the amended circular no. 16 such as:

  • Excuses for missing deadlines as provided under Points 9.3-5 which explains force majeure event and Objective obstacles that are few excuses that NOIP considers while considering the late submissions. This will reduce the scope of delays in such procedures.
  • The NOIP has been provided the time period of one month from the receipt date of the request for notice of invalidation or termination, to send such notice to the right holder as has been provided under Point 21.3.a of the amended circular which
  • The new provisions makes it impossible for the right holder to revive their applications that they have withdrawn, thus making the whole procedure, a very substantial one rather than the old casual procedure.[Point 17.5.b]
  • The provision of the amended circular sets out the obligation on NOIP to inform the Opposing party of the examination results of the concerned application which was not practiced by the NOIP till now.

2. Key changes related to examination of Patents and Utility Models

2.1 Points 27.4 and 27.5: Deadlines for PCT applications to enter Vietnamese National Phase
In the old circular 1, PCT applications were allowed to enter national phases within 37 months by paying an extra fee. However, in the amended circular, the time limit for entering the national phase for PCT applications is strictly 31 months.

2.2 Point 25.1.a(ii): Deadline for requesting examination

The deadline to request for examination is 42 months from the priority/filing date for patent applications for invention and 36 months from the priority/filing date for Utility Models. these  deadline can be  extended by 6 months only when the Applicant provides sufficient evidence of some events such as “force majeure event” or “objective obstacle”.

2.3 Amendments relating to specification [Point 17.1.c], features of function or purpose [Point 25.5.d(i)] and annuity payment [Point 20.3.a], etc are also included in the said circular with regard to the Patents and Utility Model.

3. Key changes related to examination of Trademarks

3.1 Rights to object to disclaimers – Point 15.7.a (iii)

The amended circular no. 16 provides applicants the rights to object to disclaimers of NOIP of an/some element(s) of the mark if they do not agree with it. The applicants can file an objection within three months from the notification date. The old circular however was silent on this issue.

3.2 Response to office action regarding international application – Point 41.6.d

In cases where, the Madrid application is rejected by NOIP, the applicant, through the amended circular has a three-month period to respond to the provisional refusal by NOIP, and then 90 days to appeal the decision on refusal, whereas, the old practice only provided fro a period of 90 days to appeal such rejection by NOIP. Thereby, providing a higher chance for Madrid applicants to overcome a refusal than for national marks.

3.3 There are few other amendments related to Trademarks such as:

  • Recognition of well-known marks [Point 42.4] : The amended circular lays that a mark can be recognized as a ‘Well-known mark’ through the settlement of enforcement or opposition/examination of a trademark that is identical/confusingly similar to the concerned mark.
  • Organizations entitled to register certification marks and collective marks: Point 37.5a and 37.5b : The modified circular expressly clarifies the type of organizations that can register collective marks, which was not mentioned in the earlier circulars.

4. Key changes related to examination of Designs

4.1 Definition of product – Point 33.2.b

The amended circular introduces a new definition of a product: “A product is understood as an object, device, equipment, means, or part for assembling or integrating these products, manufactured by industrial or handicraft methods, having a clear structure and function, circulated independently.” This definition is given to exclude intangible products such as “Graphical User Interface” since it is considered a product but cannot be considered a design and have also resulted in a narrow list of products that can be patentable This can be a bit of disappointment to the Applicants.

4.2 Specification in design applications – Point 17.1.c

A specification is needed to describe the appearance and features of a design in words at the time of filing, but this specification is not included in the granted certificate for the design, which results in few concerns on the validity of the specifications. In the amendments, there is a provision that an amendment must not go beyond the specification and set of figures/photos makes the role of the specification more important and therefore design specifications should be prepared with caution.

4.3 Few other amendments relating to Designs were also introduced such as, amendment to granted patent [Point 20.1.b(iv)], Renewal of design patents [Points 20.4.d, 33.2.a, and 33.5.dd(iv)]. Further, although the amended circular has provided for first to file principle, but it has failed to clear its stance on such principle as it is silent on the priority dates in case where the filing dates of the conflicting applications are same.

The amendment has been made keeping in mind the scenario of present practice followed in Vietnam and what kind of changes can help the law on Intellectual Properties be efficient in the country. Thus, the lawmakers have very logically amended the concerned circular as well as complied with the International Standards.

The amended circular No. 16/2016/TT-BKHCN, w.e.f January 15, 2018 will have a significant impact on IP practice in Vietnam and will provide a synchronization between IP laws in Vietnam and the IP laws practiced internationally.

Author: Shilpi Saxena, Jr. Patent Associate at Khurana & Khurana Advocates and IP Attorneys can be reached at shilpi@iiprd.com.

 References:

[1] https://www.most.gov.vn/vn/Pages/ChiTietVanBan.aspx?vID=28856&TypeVB=1

[2] http://www.noip.gov.vn

[3] Key Changes in Amended Circular 01

Macquarie Bank Limited vs. Shilpi Cable Technologies

Facts of the Case

The Corporate Debtor/Respondent (Uttam Galva Metallics) defaulted in the payment to the Operational Creditor/Appellant (Macquarie Bank) amounting to USD 6,321,337 equivalent to Rs. 43,11,15,190. Although repeated reminders as to the payment of the debt via emails were made, but such communications could not influence the Debtor to make the payment, pursuant to which a Statutory Notice was sent by the Appellant under Section 433 and 434 of the Companies Act. The reply to such notice denied the existence of any such outstanding debt on the part of the Respondent. After, the Insolvency and Bankruptcy Code was enacted in 2016, the Appellant furnished a Demand Notice to the Corporate Debtor under Section 8 of the Code. The Respondent replied to the notice saying that there existed no outstanding default on its part and simultaneously, also questioned the validity of the Purchase Agreement. The Appellants approached the National Company Law Tribunal and applied for the initiation of the Corporate Insolvency Resolution Process.

NCLT Order

The NCLT rejected the application of the Appellant based on two grounds that:

(1) The application for initiation of the Corporate Insolvency Resolution Process was incomplete as it did not comply with the mandatory requirements under Section 9(3)(c) of the Insolvency and Bankruptcy Code which required a certificate from a financial institution with regards to the non-payment of the outstanding amount by the Corporate Debtor. The certificate from the Appellant Bank itself was not held to be a certificate from a financial institution as it was a foreign bank which did not fulfill any of the requirements to qualify as a “financial institution” as per Section 3 (14)[1] of the Code.

(2) There was an existence of dispute before the Demand Notice was furnished upon the Corporate Debtor as per Section 8(2)(a) of the IB Code which was also raised at the time when a reply to the Statutory Notice was furnished under Section 433 and 434 of the Companies Act by the Respondent.

NCLAT Decision

The Appellants aggrieved by the order of the NCLT approached the National Company Law Appellate Tribunal for remedy against the Respondent. But, the NCLAT upheld the NCLT order stating that the application has to be complete before the initiation of the Corporate Insolvency Resolution Process and that the appellant failed to comply with the mandatory requirement of furnishing a certificate by a financial institution in which the Corporate Debtor has its account with regards that it has failed to pay the outstanding debt. Moreover, it reiterated that the Appellant Bank was not a “financial institution” as per Section 3(14) of the IB Code. Also, as it is a mandatory document which acts as an evidence to the existence of default, it has to be necessarily furnished and without it the application is incomplete.

Furthermore, the Appellant tribunal took cognizance of the Demand Notice which was furnished by the lawyer of the Appellant and noted that such Demand Notice has to be in compliance with Form 3 under Rule 5 of the Insolvency and Bankruptcy Code Rules, 2016. It was also observed that such Demand Notice was invalid as it has to be furnished as per Form 3 by the Creditor himself or by any authorized person on his behalf and lawyer cannot come under such purview as there was absence of any authority by the Operational Creditor.

Thus, the appeal was dismissed based on such grounds and the issue relating to the ‘existence of the dispute’ adjudicated by the NCLT was left unmentioned in the said order of NCLAT.

Supreme Court’s Judgment

The Appellants further aggrieved by the order of the NCLAT appealed before the Hon’ble Supreme Court. It was contended by the Appellants that if Section 9(3)(c) is read conjointly with Rule 6 and Form 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, it could be observed that the requirement of the certificate by the financial institution is not mandatory but is only directory in nature as it is just another document along with the other documents which could be relied upon by the Operational Creditor in order to prove the existence of an Operational Debt. On the other hand the Respondent contended that Section 9 uses the word ‘shall’ which clearly shows the intention of the legislature to make it a necessary and a mandatory requirement and cannot be derogated upon.

The Hon’ble Supreme Court observed that a creative interpretation of Section 9(3)(c) is necessary in the present case as the literal interpretation would be unreasonable and would create hardships for Appellants and other foreign banks in the future. Also, the requirement of certificate as a document is not necessary for substantiating the existence of default as it can be proved by other documents as well. Also, in such cases where such certificates are impossible to furnish, serious inconvenience will be caused to the innocent persons like Appellant when such requirements are not even necessary to further the object of the Act.

While dealing with the other issue related to whether a lawyer can issue a demand notice on behalf of the Creditor, the Hon’ble Supreme Court read sections 8 and 9 of the IB Code conjointly along with Section 30 of the Advocates Act which talks about the Right of the Advocates to practice. The Hon’ble Supreme Court relied upon the judgment of “Byram Pestonji Gariwala v. Union Bank of India”[2] where a signature affected by the lawyer on behalf of his client on a document related to a compromise was held to be effective in law. It was observed in the judgment that “the courts in India have consistently realized the role of lawyer when it comes to disputes and the extent and nature of the implied authority to act on behalf of their clients, which included compromising matters on behalf of their clients. The Court held there is no reason to assume that the legislature intended to curtail such implied authority of counsel.”

Therefore, the decision of the NCLT and NCLAT was overruled by the Hon’ble Supreme Court and the matter was remanded back for consideration.

Conclusion

In my opinion, the Hon’ble Supreme Court did a fair job by overriding the procedural irregularities by observing the subjective nature of the case where the general procedure was clearly out of place. Also, the objective of the statute was kept in mind at all times by the Supreme Court and language of the statute was construed in a manner which is not unjust to any party. Moreover, a liberal interpretation of the procedural aspects of the case would help the creditors recover their debts in an efficient manner, while not allowing the debtors to pull out loopholes in order to evade liability while delaying the process on the expense of the creditor.

Author: Pratyush Rao, 5th year student at ILNU, Nirma University, intern at Khurana & Khurana, Advocates and IP Attorneys and can be reached at info@khuranaandkhurana.com.

References:

[1] Section 3 (14): “financial institution” means— (a) a scheduled bank; (b) financial institution as defined in section 45-I of the Reserve Bank of India Act, 1934; (c) public financial institution as defined in clause (72) of section 2 of the Companies Act, 2013; and (d) such other institution as the Central Government may by notification specify as a financial institution

[2] 1992 (1) SCC 31

[3] http://www.taxscan.in/section-93c-insolvency-bankruptcy-code-2016-directory-nature-says-supreme-court/15454/#popup1

[4]NCLT http://www.nclt.gov.in/Publication/Chandigarh_Bench/2017

[5]NCLAT http://www.nclat.nic.in/final_orders/Principal_Bench/2017/insolvency

[6]Supreme Court judgment   https://drive.google.com/file/d/1_QCold0R9UcG1cCRE9JBzVCw4LNppJOM/view

[7] Certificate from a recognized financial institution is not a threshold bar to initiate Insolvency Proceedings: The Supreme Court’s view in Macquarie Bank Limited v. Shilpi Cable Technologies

[8] Ibc-Lawyer Can Issue Demand Notice of Unpaid Operational Debt on Behalf of Operational Creditor

Bigtree Entertainment Pvt. Ltd. vs. Brain Seed Sportainment Pvt. Ltd. & Anr

 

“A brainy person does not abuse copyright; instead he respects it and upholds it.” – Maximillian Degenerez.

Introduction

With the rise in number of businesses using the global internet portal for running their businesses and with the increase in the number of start-ups in the current economic scenario, we come across many new issues that have to be dealt with in depth and have to be decided accordingly keeping in mind the far-fetched affect it would have on the domain of intellectual property right. On one such latest instance was a question posed before the High Court of Delhi when it to deal the process to determine whether a phrase is invented or descriptive. Through this article, the author would be discussing one of the latest judgments pronounced by the High Court of Delhi (hereafter, the “Court”)in the matter of Bigtree Entertainment Pvt. Ltd. vs. Brain Seed Sportainment Pvt. Ltd. &Anr.[1]

Brief Facts

Brief facts of the case are that Bigtree Entertainment Pvt. Ltd. (hereafter, the “Plaintiff”) operates an online ticketing platform for booking tickets for movies and entertainment related events through its web portal popularly known as “bookmyshow”, for which the Plaintiff has a secured registration of the marks and logos under class 41 (education, entertainment and training)[2] and class 42 (technology and software services)[3] as “bookmyshow”. The Plaintiff had at present applied for the registration of the mark “bookmy”, which does not separately possess any trademarks of over that terms.

However, the case of the Plaintiff was that the defendant in the present case, Brain Seed Sportainment Pvt. Ltd. (hereafter, the “Defendant”) operates a web portal, namely, ‘http://www.bookmyshow.com’, an online portal for booking sporting events, venues and other sporting facilities. The suit was filed by the Plaintiff claiming an infringing off and passing off the Plaintiff’s registered trademark by the Defendant of using the term “bookmy” in the Defendant’s mark which is deceptively similar to its own, and that it is apprehended by the Plaintiff that the Defendant would mislead the consumers into associating itself with the Plaintiff’s goodwill and mass connection that the Plaintiff’s trademark has with its consumers. In particular, the Plaintiff claimed that the usage of the term “bookmy” was just an interplay of words from the Plaintiff’s registered trademark of “bookmyshow” which is distinctive trademark. The main issue that the Court was faced with was that the Plaintiff’s goodwill over its mark carried over to a part to a part of the mark and thus the mark of “bookmyshow” would pass on to the terms book and my as well and thus their mark had acquired a secondary meaning which deserves to protected in order to protect their goodwill and media connect with the consumers.

The defendants contested the contentions of the Plaintiff on two counts. Firstly, it challenged the merit of the Plaintiff’s claim over concealment of certain facts relevant to the present case before the Court and secondly, the Defendant’s claimed that the words “bookmy” were merely descriptive in nature and it had not acquired any distinctness as claimed by the Plaintiff. Additionally, the Defendant’s argued that the Plaintiff’s claim over the mark of “bookmy” were distinctiveness were indeed flawed by the aspect that there were various other websites operating in similar fields which have been being used prior to or subsequent to the Plaintiff’s web portal coming into existence.

The Defendant’s further claimed that the prefix “bookmy” is not an invented phrase meriting any legal protection, but a descriptive one that is common to a particular business format being run in a particular field. For instance, in the present case, both the parties to the suit are involved in the business of running a web portal of booking tickets, as in the case of the Plaintiff or any sporting event, as in the case of the Defendant. Thus, the Plaintiff’s claim that their trademark of “bookmyshow”  would imply that a part of the mark that is “book” and “my” would also imply a relation to their mark, is flawed on the proposition that no other web portal which deals with the aspect of acting as an intermediary in booking tickets or events in any other field cannot use the term “book” and “my”, which would be necessary to imply the format of business being run by them, hence resulting to the conclusion that the Plaintiff is not the exclusive user and adopter of the mark “book” and “my” or “book” and “my” and “show”.[4]

Issues

The issue that the Court had to looked into by the Court was:

Whether a phrase in a registered trademark is descriptive or invented one for its part trademark also would result in violation of the usage of any part thereof or not.[5]

Analysis

The single judge bench of the Court headed by Hon’ble Justice Mukta Gupta dismissed an interim application for grant of an injunction under Order XXXIX Rule 1 & 2 of the Code of Civil Procedure, 1908[6] on an application filed by Plaintiff against Defendant, against the use of the of the prefix of “bookmy” or the mark of “bookmySPORTS”.

The judgment of the Court delivered on December 13, 2017 dismissed the application on referring to numerous judgment on the same subject matter before the Hon’ble Supreme Court of India and other High Courts as well in the past.

The judgment related the present matter in light with the question of whether a phrase is descriptive or invented was considered at great lengths by the Supreme Court in the case of J.K. Kapoor vs. Micronix India,[7] where it was held that a word which is descriptive of the industry or market in which the concerned parties operates cannot be deemed to be invented as it would restrict the chance of other new participants to be able to relate their product with the industry they wish to pursue their business. Thus providing an undue advantage to the predecessor who has registered any such trademark over an industry specific mark thus refusing other participants to be able to use any part of the mark for their own identification of their product. The Court stated that a brand name cannot claim exclusivity or monopoly over a term which is descriptive of any activity in an industry.

The Court also referred to another decision of the Supreme Court in Reliance Industries Ltd v/s Reliance Polycrete Ltd,[8] the issue that was raised in this matter was whether a goodwill attached to a complete trademark carries over to a part of that trademark. It was held that the existence of any industry using the term ‘Reliance’ would only make a person conclude it was being referred to‘Reliance Industries’ alone, the Supreme Court held that reliance Industries Ltd. could not claim monopoly over the use of the term ‘Reliance’ exclusively as it was not an invented terminology but a generic term which can be used for other usages as well by other participants in the market for propagating a message across to the consumers for a better understanding of what their product is about and what the product is being sold to the consumers.

Referring to the above mentioned judgments, Justice Mukta Guptain her judgment in paragraph 16 of the judgment held:

“In the present case, defendant has placed on record examples of numerous other companies that operate with the same domain prefix, and the plaintiff has yet to put on record any evidence suggesting that the prefix “BOOKMY” is only associated in the minds of the public with the plaintiff’s business and nobody else, thus has acquired a secondary meaning and distinctiveness. Considering the facts that the use of the words “BOOKMY” are descriptive in nature and plaintiff’s trademark “BOOKMYSHOW” has not acquired a distinctive meaning, no case for grant of injunction pending hearing of the suit is made out.”[9]

The Court while dismissing the application revered to another case decided by the High Court of Delhi in the matter of P.P. Jewellers vs. P.P. Buildwell Pvt. Ltd.,[10] wherein a similar contention was raised by the plaintiff that the usage of the term “P.P.” was an exclusive trademark of the plaintiff any other person using it would affect its goodwill and would thus result in the violation of its rights protected under the trademark legislations. Hence the usage of the terminology of “P.P.” is not an invented term but just a generic one over which monopoly of one person cannot be safeguarded to prevent any harm to its goodwill.

Ratio Dicidendi

Thus, the Court while laying the ratio, also laid down the precedent that the usage of the term “bookmy”is vast and does nowhere give the impression that it is created but one of a descriptive nature providing a description of the type of business being conducted and that the plaintiff’s claim that the use of the prefix of “bookmy”is not only associated in the minds of the public with that of the plaintiff’s business and nobody else, thus has not acquired a secondary meaning and distinctiveness.

Conclusion

With the rise in the current scenario of the newly evolved businesses, the rise in mass reach over a media like that of an internet, a trademark violation can often be contended by certain businesses as in the present case. The Court in the past has already dealt with these kinds of issues and is also dealing with these issues at present, the fate of such matters might end in the same manner as is being dealt with in the current scenario wherein the Media law and the trademark laws are interjecting with each other and the court have to decide whether a certain trademark can be given exclusivity in times where a single word or even a letter can be industry specific.

Thus to conclude, media is very sensitive issue that is to be looked into very cautiously, and to decide if any usage of any trademark or any part thereof could result in damage of the goodwill of the trademark owner. The Court in the present matter before us dealt it very meticulously to arrive at a conclusion that any part of a registered trademark cannot be said to be part of the complete trademark. In the opinion the judgment of the Court is indeed on the right track and lays down that very important precedent for future references by the judiciary while deciding such matters wherein such contentions can be raised for relating a part of the trademark with the complete trademark which might result in monopoly of a single player in an industry thus violating the very essence of Article 19(1)(g) of the Constitution of India[11] and preventing any person to conduct any business by using any part of registered trademark for identifying their product with the arena in which their business offers product(s).

Author: Ms. Swatilekha Chakraborty, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at   anirudh@khuranaandkhurana.com.

References:

[1]Bigtree Entertainment Pvt. Ltd. vs. Brain Seed Sportainment Pvt. Ltd. &Anr., CS(COMM) 327/2016

[2] http://www.wipo.int/classifications/nice/nclpub/en/fr/20180101/hierarchy/class-41

[3] http://www.wipo.int/classifications/nice/nclpub/en/fr/20180101/hierarchy/class-42

[4]Paragraph 14 of the judgment, accessible at CS(COMM) 327/2016

[5] Paragraph 9 of the judgment, accessible a CS(COMM) 327/2016

[6] https://www.nls.ac.in/lib/bareacts/civil/cpc/cpco39.html

[7]J.K. Kapoor vs. Micronix India, 1994 Saupp (3) SCC 215

[8]Reliance Industries Ltd v/s Reliance Polycrete Ltd, (1997 PTC (17) 581)

[9] Paragraph 16 of the judgment, accessible at CS(COMM) 327/2016

[10]P.P. Jewellers vs. P.P. Buildwell Pvt. Ltd., [(2010) 169 DLT 35]

[11] Article 19(1)(g): “(g) to practise any profession, or to carry on any occupation, trade or business”

M/s. Sunwhite Infrastructure Pvt Ltd. V. Kindle Developers Pvt Ltd, CP No. 40 (ND)/17 (decided on 23.08.2017)

Facts

The petition was filed by M/s Sunwhite Infrastructure Pvt Ltd (hereinafter referred to as “the petitioners”) against Kindle Developers Pvt Ltd (hereinafter referred to as “the respondents”) Sec 241[1] and Sec 242[2] of the Companies Act, 2013 alleging acts of mismanagement and oppression prejudicial to the interests of the company as well as the stakeholders. The respondent company, engaged in the business of real estate development was incorporated in March 2011 with a paid up capital of Rs. 1 Lakh of which the petitioner acquired a 40% shareholding from respondent No. 3. The petitioners alleged that upon the representation of the respondents that they had been allotted a plot by Greater Noida Authority for development of a group housing project and were in need of financial assistance, the petitioners extended a loan of Rs. 6 Lakh to the respondents upon the following conditions:

  1. The loan was to be repaid within the period of one year.
  2. The respondent undertakes not to borrow any further money from third parties without the petitioners consent.

However, due to the failure of the respondents to repay the loan within the time specified, the petitioners filed a suit for permanent and prohibitory injunction in Court of Civil Judge, Delhi to restrain the defendants from parting, selling or creating rights of third parties over the allotted land. An order of injunction was passed against the respondents by the said Judge. The present petition was filed subsequently against the acts of oppression and mismanagement by the respondents who failed to appear despite being served and were, thus, proceeded ex parte.

Contentions of the Petitioner

The petitioners in the present petition contend that:

  1. In complete disregard of the loan agreement entered into by the petitioners and the respondents, the respondents not only defaulted on the payment but also took further loans from various third parties.(Para 5)
  2. The defendants were defrauding investors by siphoning off the funds collected from prospective buyers without engaging in any significant construction work. The petitioners also entered into record the audited balance sheet of the defendants for 2015-2016 reflecting advances of Rs. 157 crores collected for booking of flats against which very little construction was completed.(Para 5)
  3. The petitioners further alleged that statutory compliances were not carried out on time, no Annual General Body meeting had been conducted since Sept, 2014 and books and accounts of the defendant company were not available for inspection to the petitioners.(Para 6)
  4. It is also contended by the petitioner that in complete contempt of the order of Civil Judge, Delhi, which restrained them from altering the management of the company, respondent no. 4 & 5 were appointed as Additional Directors by the respondent company. Such appointment is otherwise illegal as well due to it not being ratified by the remaining management. (Para 6)

Issues

  1. Whether there has been oppression and mismanagement by the respondent company?
  2. Whether the appointment of additional directors is in violation of the order of civil judge, Delhi?

Judgement

The NCLT held that there had been no oppression of the petitioners in their capacity as shareholders and that their grievance was misplaced as they were aggrieved in capacity of creditor whose entitlement under a loan agreement was violated  for which the appropriate remedy would lie in a civil forum. It observed that, “The non-payment of a creditor could not be held as oppressive to the shareholder. The order of Civil Court Judge restraining the respondent from alienating the said property was enough to secure the interest of the creditor” (Para 9d).

It was held that allegations of siphoning off of funds by the respondents were largely uncorroborated and unsubstantiated and on the basis of the material placed on record, it was not possible for the Tribunal to conclude whether the advances justified the quantum of work done (Para 9a). On absence of any cogent material, the Bench was unable to accept allegations of siphoning off of funds, duping of prospective buyers or direct an investigation into the affairs of the company.

Secondly, with regard to non-availability of books & accounts of the respondent company, it was observed that there was nothing to show that the petitioners ever made any effort to inspect the same which they, as shareholders of the company, had a right to do. (Para 9b)

The NCLT held that insofar as the appointment of the Additional Directors was concerned, the appropriate form to deal with such appointment was the Court of Civil Judge, Delhi who has passed the impugned order restraining the respondents from doing so. (Para 9c)

Lastly, in response to the allegations that no AGM had been held since Sept, 2014, and that statutory compliances have not been complied with, the Bench held that as shareholders with 40% equity in the respondent company, the petitioners were well within their rights to requisition the management to convene a meeting to discuss any agenda or matter they thought fit. (Para 9e)

Directions

The NCLT gave the following directions:

  1. The Bench directed the respondents to hold AGM for defaulting years as well as the Financial Year ending on 31.03.2017 in exercise of provisions of Sec97[3] of the Companies Act, 2013, holding, the allegation of non-compliance with statutory requirements would, in absence of any defence by respondents, be tantamount to mismanagement. (Para 13)
  2. The respondents were also directed to lay before members, all Financial Statements, Annual Returns, Directors Report etc followed by filing them with the Registrar of Companies as statutorily required as well as paying all taxes required by Government. (Para 14)
  3. Lastly, though observing that courts should not ordinarily interfere with the management, with due regard to the fact and circumstances of the present case, the Bench directed the appointment of an independent Observer/ Administrator to oversee proper convening of the AGM and ensuring that all statutory requirements are complied with. The Bench also remarked that failure to comply with any of the directions would invite penal consequences under the Act. (Para 15 & 16)

 

Author: Ms. Noyonika Mukherjee, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at   anirudh@khuranaandkhurana.com.

References:

[1] Sec 241, Companies Act, 2013 provides that any member may apply to the Tribunal who complains that the affairs of the company are  being conducted in a manner prejudicial to public interest, interest of the company or is prejudicial/oppressive to him or any member of the company OR any material change has taken place in the management/ control of the company by reason of which it is likely that affairs of the company will be conducted in a manner prejudicial to interests of the company, any members or any class of member. The Central Government can also apply to the Tribunal for an order under this section.

[2] Sec 244, Companies Act, 2013 provides that an application may be made under Sec 241 by any member- (a) in case of a company having a share capital, not less than 100 members or not less than 1/10th of total members or any members(s) holding not less than 1/10th of issued share capital provided that have paid all calls/sums due on their share;(b) in case of company not having share capital, not less than 1/5th of total members. The Tribunal may, on an application, waive any of the requirements.

[3] Sec 97, Companies Act, 2013 provides that the Tribunal may, on the application of any member of the Company, call or direct calling of an AGM and give such ancillary/consequential directions as it thinks expedient, if any default is made in made in holding the AGM under Sec 96, provided that the directions may include a direction that one member of the company present in person or proxy shall be deemed to constitute a meeting. A general meeting held in pursuance of the above may be deemed to be an annual general meeting.

Online Disputes and Forum Jurisdiction

The Delhi high court on 3rd January, 2018 in Impresario Entertainment & Hospitality Pvt. Ltd. vs S&D Hospitality[1], took a different view with respect to the Internet jurisdiction[2].

In the above case, plaintiff sought permanent injunction against the defendants who was running a restaurant at Hyderabad, under  the impugned trademarks ‘SOCIAL’ and ‘STONE WATER’ and its services were available through Zomato. The court held that the plaintiff would have to produce material prima facie to show that some commercial transaction using the website was entered into by the Defendant through the app- ZOMATO, within the forum state and that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the plaintiff within the forum state.

Defendants contended that this Court has no territorial jurisdiction to entertain the present suit  as the defendant neither has his registered office within the jurisdiction of the said Court nor carries on any business within the jurisdiction of this Court. Mere existence of a website without proof of ‘the effect’ does not clothe this Court with territorial jurisdiction to entertain the present suit. Returning the plaint, the court held that a mere hosting of a website that is  accessible by anyone within the jurisdiction of the court is not sufficient for this purpose[3].

Convinced with the Defendant’s contention, the Court Further relied on Banyan Tree Holding (P) Limited v. A. Murali Reddy and Anr[4] which held that a passive website, with no intention to specifically target audiences outside the State where the host of the website is located, cannot vest the forum court with jurisdiction. The Hon’ble Court also observed that for the purposes of a passing off or an infringement action (where the plaintiff is not located within the jurisdiction of the court), the injury on the plaintiffs business, goodwill or reputation within the forum state as a result of the Defendant’s website being accessed in the forum state would have to be shown.

Earlier, the stance of the court was a bit different  in the case of World Wrestling Entertainment v. M/S Reshma Collection & Ors[5]– The Delhi High court had held that the mere website of the party referring to various goods  is not an offer but an invitation to an offer, just as a menu in a restaurant. The invitation, only if accepted by a customer in Delhi, becomes an offer made by the customer in Delhi for purchasing the goods “advertised” on the website of the appellant/plaintiff. Further, it held that mere accessibility of website in a forum state which ‘solicits’ its business, through which Defendant’s goods and services are sold, is enough to raise cause of action and in determining the personal jurisdiction in Delhi.

Legal Provisions in Regard to Jurisdiction

The Code of Civil Procedure, 1908 contains the provisions under section 20 with respect to institution of the suits where defendant resides or cause of action arises . It reads as : Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction –

  • The defendant, or each of the defendants where there are more than one, at the time of the commencement of the Suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
  • any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or 
  • the cause of action, wholly or in part, arises.”

[Explanation]: A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

Section 62 [6] provides that every suit or other civil proceeding in respect of the infringement of copyright in any work or the infringement of any other right conferred by this Act shall be instituted in the district court having jurisdiction.

 Learned author Mulla in the Code of Civil Procedure, 18th Edn., has observed that under clauses (a) to (c) of section 20, plaintiff has a choice of forum to institute a suit. The intention behind Explanation to section 20 of the Code of Civil Procedure is that once the corporation has a subordinate office in the place where the cause of action arises wholly or in part, it cannot be heard to say that it cannot be sued there because it did not carry on business at that place. The linking of the place with the cause of 12 action in the Explanation where subordinate office of the corporation is situated is reflective of the intention of the Legislature and such a place has to be the place of the filing of the suit and not the principal place of business. Ordinarily the suit has to be filed at the place where there is principal place of business of the corporation.

The Indian Courts have always followed the parent legislation – Civil Procedure Code, 1908 and have  constantly tried to harmonize the technological advancement with the statute. Therefore, in the following caselaws, the courts have explained Section 20 of the CPC with reference to IPR and internet jurisdiction.

Indian Performing Rights Society Ltd. v. Sanjay Dalia & Anr The Supreme Court of India interpreted section 62 of the Copyright Act, 1957 and section 134(2) of the Trade Marks Act, 1999 with regard to the place where the plaintiff can institute a suit. Wherein it observed that “The very intendment of the insertion of provision in the Copyright Act and Trade Marks Act is the convenience of the plaintiff. The rule of convenience of the parties has been given a statutory expression in section 20 of the CPC as well. The interpretation of provisions has to be such which prevents the mischief of causing inconvenience to parties.”

Banyan Tree Holding (P) Limited vs A. Murali Krishna Reddy & Anr. on 23 November, 2009– The division bench of the Delhi High Court held that “Under clauses (a) to (c) of section 20 CPC, a plaintiff has a choice of forum and cannot be compelled to go to a place of business or residence of the defendant and can file a suit where the cause of action arises.”

In Icon Health And Fitness, Inc vs Sheriff Usman And Anr. – the Delhi High Court assumed jurisdiction under Clauses (a) and (b), stating that the defendants ‘carried on business’ in Delhi. The entirety of the Court’s reasoning for the above is contained in two sentences – “Though the defendants are not residing in Delhi, however, the defendants are offering their fitness apps and brands through App Store, Google Play Store and e-commerce portals like http://www.amazon.in which can be accessed and operated from all over the country, including from Delhi. Thus, it can be said that the defendants are carrying on business or working for gain at Delhi and this Court has territorial jurisdiction to try and decide the present suit as per section 20 of the CPC, 1908

Conclusion

At the outset, the Court does not subscribe to the view that mere accessibility of the Defendants website in Delhi would enable this Court to exercise jurisdiction. However, a passive website, with no intention to specifically target audiences in the forum State where the host of the website is located, cannot vest the forum court with jurisdiction.[7] The Court in Impresario Entertainment & Hospitality Pvt. Ltd. vs S & D Hospitality, took a very balanced stand and logically differentiated the concept of ‘mere presence of website’ and ‘targeting the forum state’. Thus, it is appreciated that the Court is not rigid and is flexible in providing a reasonable and tenable judgments by considering different facts and circumstances. Hence, it can be seen that the Indian Judiciary is swiftly moving towards a new jurisprudence on internet jurisdiction, in accordance to section 20 of CPC.

Author: Mr. Himanshu, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at   anirudh@khuranaandkhurana.com.

References:

[1] Decided on: 3rd January, 2018 ; CS(COMM) 111/2017

[2] The Code of Civil Procedure, 1908, S-20 (c) – Other suits to be instituted where defendants reside or cause of action arises.

[3] Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414

[4] CS (OS) No. 894/2008

[5] https://indiankanoon.org/doc/71641182/

[6] The Copyright Act, 1957, Section-62-Jurisdiction of court over matters arising under this chapter.

[7] Banyan Tree Holding (P) Ltd