Category Archives: Intellectual Property

Update on Recent Stakeholder Meeting Held On 03.08.2018 at IPO, Delhi

Few of the following issues with respect to various field of  Intellectual Property, were raised by the stakeholders :

I. Patents:

a) E-communication, websites and allied issues

  • FERs are not notified to the applicants leading to abandonment of application.
  • The Patent Office website do not provide for Sequence Listing uploading in txt. format and the inline module do not provide for uploading of formal drawing after the Indian Patent application has been filed. This website also do not provide for Foreign filing authorizations and do not facilitate the certified copy as well.

b) Processing Of Application , Hearing, Video-Conferencing

  • There is no clarification regarding what documents can be filed by a Foreign Entity for claiming Small Entity Status as per Patent Rules, Form-28.
  • Hearing notices are not received, thereby leading to abandonment of the application, in case the hearing is not attended.
  • Hearings are pending in respect of post grant matters and review petitions.

c) There is no mechanism to keep a check on the opposition filed against a patent/patent application, and also the same including Pre-grant opposition is not served to the Applicant.

 
d) Other Issues

  • IPOs should provide FAQs with regard to Start-up , NBA and TKDL and allied subject.
  • IPO must conduct user satisfaction survey on quality of examination.

The IPO considered these issues and is implementing the following change:

  1. IT Support Cell has been established to provide necessary help and resolve the problems relating electronic communication. This has helped IPO in the errors relating to e-communications to less than 1%.
  2. IPO will be implementing IPO2 version of patent database, which will make filing of patent application easy and efficient and would resolve other websites issues.
  3. IPO clarifies that a Foreign entity may submit the financial statement showing its annual turnover in order to claim Small Entity Status complying with the provisions stipulated under MSME Act 2006 of India
  4. IPO advices the applicant to ensure that none of the mails regarding IPO shall drop in the spam account.
  5. In order to settle the work load of IPO with respect to FER, amended cases and post-grant matters and for clearing the pendency of matters, the Controllers appoint hearings.
  6. IPO is under the process of developing a separate module for tracking and updating the proceedings related opposition.
  7. With regard to the FAQs faced by stakeholders from their clients, IPO welcomed to answer all the FAQs provided that the stakeholders shall submit a list of such FAQs.
  8. IPO is developing a separate window of the IPO website in order to facilitate user satisfaction survey on quality of examination.

 II. Trade Mark

a) Trade Mark Registry does not allow any amendment to user details defying to the directions given by Delhi HC through decision.

b) TMR do not exercise a uniform Practice in show cause hearings with regard to interpretation of law.

c) Video Conferencing in Trade Marks should be implemented.

d) Refusal orders are sent even after filing the required documents. TMR Chennai is not handling post-registration matters.

e) There is no up-gradation of records of TMR, which results in citing in the examination report, those marks that were registered but not renewed. The dead marks continue to remain in the records of Trade mark register.

f) Hearings in international matters are being held at Mumbai Trade Marks Registry only. However, Section 36C states that an international application shall be dealt with by the head office of the Trade Marks Registry or such branch office of the Registry, as the Central Government may, by notification in the Official Gazette, specify.

The steps taken by IPO with regard to the above raised issues:

  1. IPO clarified that Delhi high Court has directed to decide the amendment of user details on case to case basis and no other administrative directions can be issued in this regard. IPO confirms that the matters are refused only in case of insufficient supporting documents.
  2. Trade mark Registry is under the process of preparing a Module for the purpose of registered user.
  3. In order to bring consistency in the proceedings, All hearing officers are being provided with a regular basis training program.
  4. IPO is seriously considering to implement the use of Video Conferencing and thus, the same is under Trial in TMR.
  5. Appropriate action has been taken up for sorting any issues related to proceedings of the post registration matters.
  6. TMR has noted the concern regarding non-up-gradation of Trademark records and appropriate actions will be taken against it.
  7. TMR will be providing Video-conferencing facility in order to conduct the hearings of International matter at all branch office.

 III. DESIGNS

a) There are many technical issues regarding online filing of Designs application. Few of the problems are:

  • Application forms drafted using the online portal are non-editable, therefore, if any amendment has to be made, the whole application is to be drafted again.
  • The fee receipt issued for online applications do not show details regarding classification of articles.
  • The online portal of the Design Office do not provide any applications except certified copies.
  • The applications filed online sometimes are objected to submit original application form and representations, thereby, duplicating efforts and increasing timelines.
  • The online portal do not show any update regarding any amendments/assignments made in the design post registration.

The Indian Patent and Design office has noted the above issues and are in the process of updating the Module to resolve the issues relating to online filing of applications.

IV. COPYRIGHT

a) IPO do not have efficiency and transparency as the Copyright office does not timely acknowledge or respond to the applicant. In many cases, the copyright office asks the applicant to re-submit copyright work without providing any explanation for the same.

b) Copyright – Searchable data is not available

The steps taken by IPO with regard to the above raised issues:

  1. The Copyright office has taken various steps to reduce the pendency of applications, which has brought a positive change.
  2. The Copyright office website has started to display the application received on a monthly basis, in order to increase transparency and stakeholder’s participation and to make it easier for the applicant to keep a track on the status of the Application. This also helps in facilitating information to the stakeholders and thereby, providing them an opportunity to file an objection if any before the Registrar of Copyrights.
  3. Further, the communication regarding Discrepancy Letter and the Register of Copyrights (R.O.C) between the Copyright Office and the Applicants can be transmitted via emails registered on: http://www.copyright.gov.in.
  4. Copyright Office has also published the Practice and Procedure Manual for examination of Literary, Artistic, Musical, Sound Recording and Cinematograph Films.
  5. Preparation of database for past copyright register for search purpose is under consideration.
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The Need of IP Audit In Successful Management Of IPR

IP_audit

image from : http://www.ip-pragmatics.com/intellectual-property-audit

“If you don’t measure it, you can’t manage it”

An organization needs to substantially maintain its Intellectual Properties such as maintaining a record of IP filings, prosecution, and maintenance and protection of such IP by taking affirmative action against infringement of an IP in multiple jurisdictions which requires dedicated time, money and manpower. This kind of well-maintained and well updated inventory of all IP assets helps the organization in making an informed decision for its future planning. Thus, once IP assets are inventoried and all existing IP procedures are documented, the future plans for growth and gains can be aligned in accordance of the business policies and help them to plan a long term goal oriented business strategy. Identification of all the IP assets is also a pre-requisite to get finance and a good IP audit works towards preparing a proposal for obtaining finances, improving loan rates and increasing share prices.[1]

One may be inquisitive to understand the meaning of IP Asset since in today’s world IP Assets are the biggest value drivers in an organization. Hence, IP asset management can be defined as “Things of value that are not tangible but can be measured and managed and to which a value may be attached”.[2] On the other hand, IP audit can be defined as a systematic review of all IP assets owned, used or required by a business in order to uncover under-utilized IP assets, to identify any threats to an organization and to enable business planners to devise informed strategies that will maintain and improve the organizations’ market position.

To be precise, IP audit helps the organization to do a SWOT analysis – a study that determines the

  • Strengths;
  • Weaknesses of the organization;
  • Opportunities in the marketplace, and using the opportunities through research and development and vice versa and the last aspect of the study deals with and;
  • Threats that are perceived from the market, from competition and from within the organization. However, in order to get this information regarding the organization, IP audit must be conducted regularly. IP audit helps to make and update the inventory of the IP assets, and to analyze:
    • How the IP assets are used or unused?
    • If the IP assets are owned by the company or by others?
    • If the IP assets infringe the rights of others or are rather infringed by others?
    • What actions are required to be taken with respect to each IP asset, or a portfolio of such assets, to serve the relevant business goals of the company?

Types of IP Audit

1. General Purpose IP Audit

General IP audit is done in order to maintain and control the IP assets. It, thus, ensures the health and well being of IP assets. This type of IP audit also helps in reviewing the statutory requirements for maintaining patent and trademark applications.

A general or broad IP audit is done in the following contexts:

  • Before establishing a new company it is always important for a start ‐up Company to be aware of intangible assets it owns or needs to protect.
  • When a business is considering implementations of new policies, standards, or procedures relating to IP.
  • When a business is considering implementing a new marketing approach or direction, or is planning a major reorganization of the company.
  • When a new person becomes responsible for IP management.

Once a comprehensive IP audit has been undertaken, a smaller effort and expense is needed at regular intervals, such as on an annual basis, so that IP assets are reviewed and appropriate decisions taken, depending on the current and emerging needs of a company.

2. Event Driven IP Audit

Event driven IP Audit is generally much narrower in scope than a broad or general purpose IP audit. Further, the nature and scope of such an audit is determined by the event in question, and the time and resources available for the same. It is also called IP Due Diligence, when it is done to assess the value and risk of all or a part of a target company’s IP assets. It is conducted by a third party before an IP portfolio is bought or invested in. and provides information that may affect key elements of a proposed transaction. Few events which require the preparation of IP due diligence:

  • Merger & Acquisition or Joint Venture:
  • Financial transactions:
  • IP licensing:
  • Launching a new product or service:
  • Buying or selling a business division or IP transfer:

3. Limited Purpose Focused Audit

A limited purpose audit is typically much narrower in scope than the other two types and is performed under much constrained time schedules. These audits tend to be situational in nature. They are typically used to justify a certain legal position or the valuation of a particular IP. It is majorly done in the following cases:

  • Foreign IP Filings: Before a company takes up an aggressive program of filing IP applications in other countries, that is, before entering a new market abroad (by way of, say, exporting, or expanding overseas through off‐shoring/outsourcing some of its activities, or by licensing, franchising or merchandising) an IP audit helps to sensitize the company to market‐specific IP laws, rules, customs and practices affecting IP rights.
  • Significant changes in IP law and practice: Where there is a significant change or development in IP case law or statutory law in a relevant market it may necessitate review of existing products for possible infringement of the IP rights of others.
  • Personnel turnover:Before a major personnel turnover of in‐house research and development or marketing, especially if it involves disgruntled employees, an IP audit should be done to secure the status of a company’s IP assets.
  • Clean room procedures:The clean room procedure seeks to avoid infringement by ensuring that there is no “access” to copyrighted material of unrelated parties during software development project. Thus, an audit might be necessary to institute, or to review the adequacy of, clean room procedures used in the development of software products so as to reduce the risk of infringing third party copyright.
  • Preparing for litigation: When considering or facing litigation, a company is required to show non‐infringement and no access to the work, complete or confirm the chain of title of the underlying IP rights or otherwise complete the documentation of the relevant IP rights.

Conclusion

An IP audit provides information on the nature and strength of the intangible assets by studying the IPR associated with those assets. An IP audit can be a relatively simple exercise that can have a meaningful role in avoiding various circumstances – violation of others’ rights, protecting one’s IP/IPR, minimizing the risk of thirty party IP violation, clarifying IP ownership issues, etc. It also serves as a guiding tool for maintenance, management and safeguarding of IP rights. As companies understand the value of their intangible assets and rights associated thereto, the importance of IP is bound to grow. As a result the role of IP audit and valuation has a long way to go. Professionals will surely hone their skills in order to conduct meaningful and an effective audit and valuation which will further help companies in safeguarding against appalling future surprises.

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

References:

[1] Ahuja V. K, Law relating to Intellectual Property Rights, 2nd Edition, Lexis Nexis, (2013).

[2] Pierre El Khoury; Implementation of the National Intellectual Property Strategy and Intellectual Property Rights Protection for Small and Medium-Sized Enterprises (SMEs) : conducting an IP Audit and Managing IP Assets; nov’2013: http://www.wipo.int/edocs/mdocs/sme/en/wipo_smes_bik_ 13/wipo_smes_bik_13_m_pierre_el_khoury.pdf/

Role Of IPR In The Fashion Industry

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

Trademark

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

Examples:

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

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

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

Copyright

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

Trade Secrets

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

Examples:

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

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

Patents

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

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

Conclusion

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

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

 

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

References:

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

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

IPL (Indian Premier League) And IPR (Intellectual Property Rights)

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

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

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

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

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

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

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

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

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

References:

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

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

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

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

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

Relation of IPR and Olympic

Introduction

Olympic is the largest sporting event in the world, which features both summer and winter sports. Currently XXIII Olympic Winter Games are going on in the capital of Republic of Korea. Thousands of players and their supporters come from across the globe. South Korea is expected to spend $ 13 billion in organizing the 2018 winter Olympic[1]. Historically, to get sponsorship for organizing the Olympic games, the hosting country uses the Olympic symbol, flag, motto and anthem, transfers all the rights related to these elements to the sponsors. The intellectual property(IP) system plays an important role in safeguarding the unique character of the Olympic Games. In Olympics games, the act of ambush marketing has been an increasing phenomenon which is a serious concern for the hosting countries. This article will highlight the IP aspects of the Olympic games.

Intellectual Properties in Olympic

Usually, motto, logo, anthem and emblems are seen as Olympic properties but in practice it is more than that. It encompasses all rights relating to the Olympic Games in relation to advertisement, organization, telecast, broadcast and marketing of the event. The Olympic properties qualify for IP protection under laws governing copyright, trademark and industrial designs, which together with patents, utility models and trade secrets make up the palette of IP assets that are relevant to the Olympic Games[2]. All the IP rights associated with the Olympic properties are exclusively owned by the International Olympic Committee (IOC), which provides support for organizing and hosting of Olympic.

Innovation in Olympic games

The 2018 Pyeon Chang Olympics is the latest example in which one can easily find the relation of invention and Olympics. In the 2018 PyeongChang Olympics, a torch was designed in such way that the flames will continue to burn in all weather conditions, and that will withstand the strong winds and heavy snowfall that can be expected in the Republic of Korea. This example shows the quality of innovation in the Olympic Games. Therefore, it is a duty of the hosting country to protect the rights of the innovator.

Challenges to the Protection of Olympic Intellectual Properties

The IOC places heavy emphasis on protecting intellectual properties rights associated with Olympics because financial success of the Games and the profit that Games themselves generate for corporate sponsors depends entirely upon the protection of the Olympic properties. These properties are threatened in several ways, including ambush marketing, trademark infringement, counterfeiting and cybersquatting. Ambush marketing and trademark infringement occur more often in the Olympic Games.

Ambush marketing – Ambush marketing occurs each time when a non-Olympic sponsor tries to portray itself as an official Olympic sponsor in an effort to “capitalize on the goodwill, reputation, and popularity” of the Olympics[3]. In 2016 Rio Olympic Games, there were many cases of ambush marketing like Nike and its ‘unlimited campaign’, social media posts, Ford videos etc. To tackle with the menace of ambush marketing, the hosting countries have started to enact special legislation. An anti-ambush marketing legislation was introduced for the first time in 2000 Sydney Olympic. Similar was the means used in the 2016 Rio Olympic where Brazil enacted special legislation called Olympic Act (Law 12,035/2009) to protect the interest of official sponsors from ambush marketing.

Trademark Infringement  The hosting country’s ability to raise money from sponsors, suppliers, advertising agencies and licensees is hindered by a mere possibility of trademark infringement. The IOC has taken numerous steps to prevent the trademark infringement. There are numerous lawsuits that have been filed by the IOC against trademark infringers i.e. lawsuit to restrain defendants from using term “Olympic” in an athletic competition[4] and trademark opposition suit against application of bakery to register mark “Olympic Kids” for use on its baking goods.[5]

International Treaty on the protection of the Olympic Symbol

The Nairobi Treaty on the Protection of the Olympic Symbol is one of the international treaties on IP administered by WIPO. Any state that has ratified the treaty is obliged to refuse or to invalidate the registration of a mark and to prohibit by appropriate measures the use of a mark or other signs, for commercial purposes, of any sign consisting of or containing the Olympic symbol, as defined in the Charter of the International Olympic Committee (IOC), except with the authorization of the IOC[6].

Conclusion

In the current world, the Olympic Games are a brand in itself and the protection of the Olympic properties is very important. The IOC has been trying to protect the Olympic properties with the help of international treaties and national legislations. However ordinary legal protection, such as trademark, copyright remains essentials. These laws are not sufficient in protecting the Olympic properties and like other trademark or copyright owners, IOC faces a number of challenges in managing its IP, particularly in relation to social media platforms. IOC and other bodies must therefore, ensure that the Olympic properties should be protected so that people of all ages and all continents can continue enjoy the mega event that Olympics are.

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

References:

[1]https://www.npr.org/2018/02/02/582790412/south-korea-prepares-to-spend-13-billion-on-winter-olympics-is-it-worth-it (Last Updated on 26/02/2018)

[2]http://www.wipo.int/portal/en/news/2018/article_0002.html(Last Updated on 26/02/2018)

[3] Stephen M. McKelvey, Atlanta ’96: Olympic Countdown to Ambush Armageddon? 4 SETON HALL J. SPORT L. 397,401(1994)

[4] San Francisco Arts & Athletics, Inc. v. U.S. Olympic Comm., 483 U.S. 522 (1987)

[5] O.M. Bread, Inc, v. U.S. Olympic Comm, 65 F.3d 933(Fed, Cir. 1995)

[6]http://www.wipo.int/ip-sport/en/olympic.html(Last updated on 26/02/2018)

Referential Names & Intellectual Property Infringement

With progression of time we are witnessing the rise of Intellectual Property (IP) issues in India across industries. Every new case raises a few new questions and simultaneously rests some old ones. While traditionally IP disputes arose mainly in the pharma  and software industries, recent trends have shown a noticeable surge in other industries including the Appliances and Consumer Electronics (ACE). One such case in the Bombay High Court, belonging to a particular segment of the ACE industry, highlights relevant issues for the entire industry.

This suit for IP infringement was instituted by the multinational electronics company Seiko Epson, against Jet Cartridge (India) Pvt. Ltd. Epson, a company whose very name stands for “Son of Electronic Printer” quite imaginably has a strong IP portfolio around its printers, basis which it alleged that Jet Cartridge, was infringing on their IP rights on two counts- one, that of the registered designs of the nozzles that are used in cartridges, and the other of using their trademark ‘EPSON’ without authorization when they label their products as “Compatible with EPSON”.

Assessing the first aspect involves a simple test of comparing the registered designs with that used by the defendants.   The Indian Industrial Design registrations with numbers 235236 & 235237, titled “Packaging Container ” along with 235238 & 235239, titled “Container Cap with Stopper”, entitles EPSON under the Design Act,  2000, to exclusive use of the designs covered. The order by the court dated 23 November 2016 reflects that the counsel appearing for Jet Cartridge, Dr. Saraf, made a statement- as regards the design infringement, the defendants will change the nozzle of the cartridge from the plaintiffs’ proprietary design and they will do so with immediate effect. The nozzles of all existing products and inventories which have not yet gone into market will also be changed.

Coming to the more interesting part of the case, the argument that the trademark law allows EPSON to an outright exclusive use of its name, even if it were used merely as a reference, was a contentious one. Ordinarily,  in a trademark infringement matter, the court sees whether the defendant used a mark identical or similar to the plaintiff’s mark in a manner that may confuse/ deceive a consumer into believing that the defendant’s goods/ services are actually that of the plaintiff’s. Typical examples include using minor spelling or visual variations, strikingly similar packaging or direct  counterfeiting. In this case, however, the question really was whether the inscription “Compatible with EPSON” on a cartridge packaging would qualify as infringement . If so why, and if otherwise why not?

On one side, the argument stands that a clear indication is provided that the cartridge does not belong to EPSON but is merely compatible for use with EPSON printers and hence not misleading. While on the other hand, would it be unrealistic to assume that a casual customer might be led to believe that the company selling the products are authorized by EPSON to do so, and is indirectly buying it from EPSON. Honorable Justice Gautam Patel, had the following to say on this aspect:

Ms. Oberoi for  the plaintiffs  would have it that the defendants are prohibited  from  using the name EPSON  at all, even in a purely  descriptive sense to demonstrate  compatibility, because this is the plaintiffs’ trademark , even if the defendants do not use that word  as a trade mark  but only as a descriptor  to identify compatibility. Prima facia, this does not seem to be a supportable or tenable proposition  in law. A laptop repair service may, for instance, say that it can repair  laptops of  various  makes and brands and names these, but not use these as trademarks. Persons make various kinds of accessories (screen  protectors, peripherals,  etc.)  and  these  are  often  denominated  as  being compatible  with  a certain name  product:  mobile  phones, for instance, of specified makes and brands. This use is not illicit. The plaintiffs  enjoy  a  monopoly  in the  mark  and  are  entitled  to prevent unauthorized  use of  the mark. The defendants are clear that they do not use the name as a mark but only to identify that their cartridges are compatible with printers manufactured by the plaintiffs. There cannot be the kind of monopoly that Ms. Oberoi suggests. At her instance, I  will leave contentions open in  this regard till the replies and rejoinders are filed.

While the court was open to further deliberation and debates over its initial view on the subject matter, as the trend goes, the dispute was settled between the parties. The consent terms dated 20 December 2016 that were tendered to the court had Jet Cartridge reaffirming its undertaking to change the nozzle designs altogether, whereas EPSON agreed to their use of “Compatible with EPSON” on their packaging. Thus, an important perspective regarding the legal principles and consequences on the use of referential naming was set.

Author: Abhishek Pandurangi, Partner, Attorney of Law at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at abhishekp@khuranaandkhurana.com.

Cyber Theft of Intellectual Property

With the growth in the use of internet these days the cyber crimes are also growing. Cyber theft of Intellectual Property(IP) is one of them. Cyber theft of IP means stealing of copyrights, trade secrets, patents etc., using internet and computers.

Copyrights and trade secrets are the two forms of IP that is frequently stolen. For example, stealing of software, a unique recipe of a well-known dish, business strategies etc. Generally, the stolen material is sold to the rivals or others for further sale of the product. This may result in the huge loss to the company who originally created it.

Earlier, a lot of physical labour, time and money was spent to steal a trade secret or make a pirated version of anything. The original copies had to be physically stolen which used to take lot of time and money. But in the present scenario these works can be done easily sitting at one place without shedding too much time and money on it without leaving any proof of it.

One of the major cyber theft of IP faced by India is piracy. These days one can get pirated version of movies, software etc. The piracy results in a huge loss of revenue to the copyright holder. It is difficult to find the cyber thieves and punish them because everything they do is over internet, so they erase the data immediately and disappear within fraction of a second. The country has started taking strict measures to curb this offence. Telangana Intellectual Property Crime Unit (TIPCU) is one of the first unit that has been launched to deal with the IP crime.

Some of the ways through which one can protect IP from cyber theft are:

  • Frequently updating the list of IPs’ that need to be secured.
  • The company can increase the security to access its trade secrets.
  • It can reduce the number of people who can access their trade secrets.
  • Company needs to be up to date with software systems.
  • Constantly checking for some unusual cyber activities.
  • Constantly educate their employees about cyber security.
  • Constructing some threat mitigating programmes.
  • Installing up-to date anti-virus software.
  • Allowing employees to reach only some classified data.

Even after taking all these steps to protect IP’s there is no guarantee that they cannot be stolen because human dependence on the internet is growing constantly and people come up with new ways to do even a small thing so even in this case these cyber thieves may come up with new ways to crack all these security systems.

Author: M.Sai Krupa, Intern at Khurana & Khurana, Advocates and IP Attorneys. Can be reached at anirudh@khuranaandkhurana.com.

References:

[1] http://law.jrank.org/pages/11992/Cyber-Crime-Intellectual-property-theft.html

[2]http://stlouis.cbslocal.com/2017/05/12/trending-topics-intellectual-property-at-risk-from-cyberthreats/

[3] http://www.iiprd.com/indias-first-ip-crime-unit-launched-telangana-state/

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

Patent (Amendment) Rules 2017

Department of Industrial Policy and Promotion (DIPP) has amended Patent Rules 2003 with effect from 1st December 2017 called as the Patent (Amendment) Rules, 2017. The definition of “startup” under rule 2(fb) has been substituted with a new definition. A more liberal definition of startup has been incorporated that can allow domestic as well as foreign entities to claim benefits such as fast-track mechanism and lower fee for filing patents.

According to the Patent (Amendment) Rules, 2017:

“Startup” means

(a) an entity in India recognized as a startup by the competent authority under Startup India Initiative.
(b) In case of a foreign entity, an entity fulfilling the criteria for turnover and period of incorporation/ registration as per Startup India Initiative and submitting declaration to that effect.

Explanation: In calculating the turnover, reference rates of foreign currency of Reserve Bank of India shall prevail.[1]

According to the Patents (Amendment) Rules, 2016 startups were defined as entities which are working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property where more than five years have not been lapsed from the date of incorporation/registration with a maximum turnover of INR 25 crore per year.[2] However, according to the Patent (Amendment) Rules, 2017, a startup can be any Indian entity recognized as a startup by the competent authority under the Startup India Initiative or a foreign entity that fulfils criteria for turnover and period of incorporation/registration as per Startup India Initiative.

Under Startup India Initiative an entity shall be considered as a Startup, if it fulfils following criteria:

1. incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India;
2. incorporated or registered in India not prior to seven years, however for Biotechnology Startups not prior to ten years;
3. turnover for any of the financial years since incorporation/ registration has not exceeded INR 25 crores;
4. has not been formed by splitting up or reconstruction of a business that was already in existence; and
5. working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.[3]

In view of the foregoing, it can be concluded that the period of incorporation/registration that was 5 years under 2016 rules has been extended to 7 years (10 years in case of biotechnology startups) by the 2017 rules. Also, foreign companies can now claim benefits if they fulfill above mentioned criteria for turnover and period of registration as per Startup India Initiative. Further, to claim benefits for filing patents, Indian entity should be recognized as a startup by a competent authority under Startup India Initiative, whereas foreign entity may provide equivalent documents as an evidence for fulfilling criteria for turnover and period of incorporation/registration as per Startup India Initiative along with a declaration to that effect.

[1] http://www.egazette.nic.in/WriteReadData/2017/180577.pdf

[2] http://www.ipindia.nic.in/writereaddata/Portal/IPORule/1_42_1_Patent__Amendment_Rules

[3] Notification Number G.S.R. 501 (E), https://startupindia.gov.in/notification.php#