Case of copyright infringement by former employees

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There have been Intellectual property disputes between the recently launched English news channel Republic TV, and Bennett, Coleman & Co Ltd (BCCL), the owner of Times Now TV channel. Their bone of contention began with disputes over trademarks. Previously, the two organizations were challenging each other over the usage of the phrase ‘the nation wants to know’ and ‘nation wants to know’. 

In a recent development, on 16th May 2017, Bennett, Coleman & Co Ltd (BCCL) lodged a complaint against Arnab Goswami, the founder of the Republic TV, and journalist Prema Sridevi for infringing its copyright. BCCL alleged offenses of theft, criminal breach of trust, misappropriation of property and infringement of IPR by using the same on Republic TV in several instances on May 6 and May 8, 2017.

On May 6, Republic TV broadcast information related to Lalu Prasad Yadav. This broadcast included audio tapes of telephone conversations between Lalu Prasad Yadav (former Bihar Chief Minister) and Shahabuddin (a criminal turned politician). May 8 saw a broadcast on Republic TV of information related to the late Sunanda Pushkar (wife of politician Shashi Tharoor), including a recording of an interview between Sridevi (in her capacity as an employee of Times Now) and the now deceased Sunanda Pushkar.

BCCL alleged that these audio tapes and research were accessed by Goswami and Sridevi while they were employed by Times Now. It is to be noted that Goswami was the president and the editor-in-chief of news channels Times Now and ET Now until November 01, 2016.

The second hearing of this case took place in the Delhi High Court on Friday, the 26th of May. According to BCCL, the procurement and the use of information belonging to BCCL without their knowledge and consent amounted to a breach of terms of the employment contract of Goswami.

In their defense, Republiv TV submitted that they did not violate the clauses of the employment agreement and had no intention of doing so. They also denied all allegations of intellectual property infringement. Further, they submitted that these allegations were levelled against them by Times Now due to a fall in their ratings and a loss of viewership due to the spectacular launch of Republic TV.

The Delhi high court restrained Times Group and Republic TV from quoting or broadcasting the details of the court proceedings against each other in the ongoing case of theft and copyright infringement. However, Justice Manmohan clarified that the restriction is not applicable against third parties. He also added that the two channels could continue to broadcast and report on any judicial order or judgment in the case. The next hearing of this case is scheduled on 31 August.

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Facebook’s systematic plan for Peer-To-Peer mobile payments market in India

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FACEBOOK has filed a patent application in India, which attempts to protect a technology that enables making and receiving payments using a messaging applications. The patent application envisages peer-to-peer payment between users of a messaging application, such as WHATSAPP. Selected figures from the patent application indicates the intended use of the technology.

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This Indian patent application is based on a US patent application, which was filed in December, 2014, after FACEBOOK acquired WHATSAPP. Interestingly, in April of this year, WHATSAPP announced that it would be introducing digital payments in India.

One could argue that WHATSAPP is positioned to corner a significant share in the digital payment market in India. For starters, WHATSAPP has a huge consumer base in India and is popular even among those who are not so digitally savvy. Adding to that is the convenience factor in making payments using a chat application. To top it all, the patent application, which might eventually be granted a patent, considering that there are several patents related to payments granted in India. As an example, EBAY was granted a patent (patent number 242805) covering certain technology that facilitates micropayments between parties. A patent grant to FACEBOOK will enable WHATSAPP to monopolize key aspects of the technology that enables peer-to-peer payments using messaging application.

The patent application and WHATSAPP’s digital payment initiative may be the first big bet by FACEBOOK to directly generate revenues from WHATSAPP since its acquisition.

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WIPO Technology and Innovation support centers in India

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What is TISC?

In April 2009, the member states of World intellectual property organization (WIPO) directed the organization to commission “Technology and Innovation Support Centers (TISCs)” as Pilot programme to facilitate the national offices for intellectual property in developing countries, especially Least Developed Countries (LDCs), as well as their regional and sub-regional intellectual property organizations to access specialized databases provided by WIPO.

According to WIPO, the TISCs will provide the following services:  

  • Access to online patent and non-patent (scientific and technical) resources and IP-related publications;
  • Assistance in searching and retrieving technology information;
  • Training in database search;
  • On-demand searches (novelty, state-of-the-art and infringement);
  • Monitoring technology and competitors;
  • Basic information on industrial property laws, management and strategy, and technology commercialization and marketing

Since the launch of the programme till 2016, about 519 TISCs have been established throughout the world out of which about 280 TISCs are established in African continent.  It is acknowledged that through access to specialized databases and capacity building provided by TISCs, the innovation index and intellectual property has improved considerably in these nations.

India’s Pact with WIPO on TISC

Followed by the success of TISCs majorly in LDCs, On 13th November 2016, Department of Industrial Policy and Promotion (DIPP), Government of India (GOI) made a pact with WIPO to establish TISCs in India. According to the statement released by DIPP, “TISC will give an impetus to Knowledge sharing, sharing of best practices among the TISC’s, capacity building, generation and commercialization of IPs” which will help India to improve its IPR infrastructure.

IPR infrastructure in India

The Indian government has continuously taken initiatives to enhance the IPR infrastructure. For example, during the 11th Five Year Plan, GOI established an institution named “National Institute of Intellectual Property Management (NIIPM)” which focuses on training the examiners of Patents, Designs, Trademarks and Geographical Indications, IP professionals and IP managers. It also aims to impart basic education to user communities, government functionaries and stake holders involved in creation, commercialization and management of intellectual property rights (IPR). Recently the Cell for IPR Promotion and Management (CIPAM) announced a scheme called “Creative India, Innovative India” which was expected to commence by April, 2017. The scheme at an expense of around INR 30 crores (approximately USD 5 million), aims to create awareness and educate various user communities which are involved in innovation and commercialization of IPR. On the other hand, India has numerous techno-legal IPR firms that works for several decades in the field and offers high quality IPR services.

If institutions like NIIPM and schemes like “Creative India, Innovative India” work to fulfil and deliver their respective agendas, India will acquire all benefits that are claimed to be delivered by TISCs. Hence, the establishment of TISCs will replicate the same benefits that will be achieved through foregoing schemes and also seriously affects the growth of Indian IPR firms that have been diligently working to make remarkable improvements in the field for several decades. Not to forget, Indian IPR firms have been providing IP services, specifically patent services, to firms in US and Europe.

It may be fair to conclude that India has significant knowledge and resources in the field of IPR and has infrastructure to further improve IPR services within the country. Hence, India may utilize the home-grown institutions and firms to strengthen IPR, and introduction of TISCs may only dilute the resources available for the cause.

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VAT on McDonald’s trademark licenses

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The last few decades have witnessed an influx of many international consumer brands in India. These multinational corporations license their intellectual property to regional organizations, which can subsequently become franchisees of the International brand. International brands license their trademarks and patents to regional organizations that pay fees in the form of royalties. The Delhi High Court passed judgement in an interesting case concerning the taxation of such royalties of the following companies: McDonald’s (the Appellant), Bikanerwala, GlaxoSmithKline Asia and Sagar Ratna (the Petitioners).

            The abovementioned companies owned trademarks and licensed their brands in franchise agreements. GSK Asia had issued trademark licenses of their powdered beverage, ‘Horlicks’, to SmithKline Beecham Consumer Healthcare Ltd. for sale in India, Nepal and Bhutan. All licenses were non-exclusive, and the Petitioners received royalties made up from a percentage of the revenue earned from the sale of the trademark-bearing products, namely burgers, health drinks, biscuits, etc.

            The Constitution states laws related to Sales tax and Service tax in the Articles 246, 268A and the Seventh Schedule. The Union List (a list of items given in the Seventh Schedule on which the Parliament has exclusive power to legislate) provides for ‘92C. Taxes on services’, while the ‘54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I.’ is included in the State List. Generally, according to the stated excerpts, an IP transaction would be taxed ‘Service Tax’ by the Union if it is taken as a rendering of a service and would be taxed ‘Sales tax or VAT’ by the State if it is taken as a sale of goods.

            There have been several situations wherein organizations tried to bypass either of the taxes by reasoning that the nature of their IP transaction was not taxable by the concerned authority. After several litigations and constitutional amendment, the law related to IP transactions can be summarized as follows:

  1. Composite contracts that include elements of both sale and service cannot be taxed twice. (State of Madras v. Gannon Dunkerley). Sales tax (or VAT) and Service tax are mutually exclusive taxes.
  2. Transfers of the right to use goods (TRUGs) are considered sales. IP is considered as goods.
  3. A mere permission to use IP is not considered to be a sale.

Now, it is to be noted that when an IP transaction is considered to be a sale, the respective State(s) may levy sales tax on the resulting royalties. Hence, it is not a surprise that time and again, several States claimed that IP licenses are considered as TRUGs, due to which the States can levy sales tax on the transaction.

The main question here was to identify the circumstances where the licensing of IP rights amount to a sale of goods, and the circumstances in which they would amount to the rendering of a service. In BSNL v. Union of India (2006), Justice Lakshmanan delivered five criteria that had to be fulfilled for a transaction to qualify as a TRUG:

  1. There must be goods available for delivery;
  2. There must be a consensus ad idem as to the identity of the goods;
  3. The transferee should have a legal right to use the goods – consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee;
  4. For the period during which the transferee has such legal right, it has to be the exclusion to the transferor -this is the necessary concomitant of the plain language of the statute – viz. a “transfer of the right to use” and not merely a licence to use the goods;
  5. Having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others.

      In this case before the Delhi High Court, the crux of the matter was whether sales tax had to be levied on the royalty payments received by the licensors in the trademark licensing.

            In the assessment year 2005-2006, the Delhi Value Added Tax authorities gave a notice to McDonald’s that royalty payments were to be taxed as they were related to the transfer of rights to use the trade mark "McDonald's". On 17th March 2006, the Value Added Tax Officer issued a letter alleging that McDonald’s had a sale turnover from trade mark and patents in the form of royalty received from its franchisees; and thus, attracted a levy of sales tax under the provisions of the Delhi Sales Tax on Right to Use Goods Act, 2002 (DSTRTUG Act).

Subsequently, McDonald’s filed a reply wherein it resisted the levy of sales tax under the DSTRTUG Act and submitted a copy of the Master License Agreement (MLA) executed between the Appellant and McDonald’s India. However, the Value Added Tax Officer treated the McDonald’s system as goods and sent McDonald’s an order with a demand of Rs. 13,44,684 charged as Sales tax.

Aggrieved, McDonald’s appealed to the Joint Commissioner of Trade and Taxes, who upheld the order given by the Value Added Tax Officer. In response, McDonald’s appealed to the Appellate Tribunal in September 2008. The Tribunal, however, dismissed the appeal. As a final resort, McDonald’s filed an appeal at the Delhi High Court.

In a similar manner, the petitioner Sagar Ratna Restaurants Private Ltd paid Service tax to the Central Government at a rate of 12.36% for the related fiscal year, but received an order passed by the Value Added Tax Officer stating that its received franchisor fee is subject to DVAT levy. Additionally, Bikanerwala Foods Pvt. Ltd and GlaxoSmithKline Asia Pvt. Ltd. have entered into franchise agreements similar to that of McDonald’s and Sagar Ratna Hotels, earn royalty for rendering such services and accordingly pay service tax on the same. They were also served notices regarding the payment of VAT.

McDonald’s argued that the franchise agreement only confers the right to use the McDonald’s systems in a restaurant, and royalty is paid as a percentage of gross sales. Further, according to one of the clauses in the licensing agreement, the licensee is not allowed to use any name, mark or other related intellectual property except in connection with the operation of the restaurant.

McDonald’s applied the five-point criteria of BSNL stated above, and stated that there were no goods which were deliverable at any stage and there was no transfer of right to use any trade mark. Thus, they argued that the levy of sales tax/VAT was without jurisdiction and contrary to the relevant statutory provisions

The franchise agreements signed between the Petitioners and their respective franchisee parties were drafted in a similar manner, wherein the licensees were not given the exclusive right to use the respective trademarks and were only permitted to use the trademarks for the limited purposes provided in the franchise agreements. Thus, the Petitioners gave an argument similar to that of McDonald’s.

When the Delhi High Court examined the McDonald’s Master License Agreement, it found that the agreement was a composite franchise agreement which included trade secrets, know-how, recipes, training, etc. along with the trademark to the franchisee. The High Court determined that a limited right to use the composite system of a business is not a transfer of the right to use goods. Subsequently, the Court held that any such composite contract that non-exclusively provided a bunch of services could not be levied Sales tax.

The Delhi High Court’s judgement in this case cleared the confusion caused by several contradictory judgements passed in prior cases. However, it seems to be too little, too late, considering the introduction of the Goods and Services Tax (GST) from 1st July 2017, which is bound to change the game altogether.

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Japan Patent Office invites Indian IPR Practitioners for training

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The Japan Patent Office (JPO) is known for hosting training programs that are well received and respected. The JPO in co-ordination with Japan Institute for Promoting Invention and Innovation (JIPII) and The Overseas Human Resources and Industry Development Association (HIDA) is organizing training program for Indian IPR practitioners in Japan. One of the training programs focuses on patents, while the other focuses on trademarks.

The training program focusing on patents will be held between August 22 and September 07, 2017. JPO is inviting patent attorneys, IP lawyers, patent practitioner and persons working at Japanese enterprise to apply. The training program is designed to cover topics ranging from IPR enforcement under the TRIPs regime to License negotiation for Standard Essential Patents.

The training program focusing on trademark will be held between December 04 and December 15, 2017. JPO is inviting patent/trademark attorneys and IP lawyers involved in trademark practice, employees engaged in trademark practice in private business, and persons working at Japanese enterprise to apply. Note that you will notice discrepancy in dates when you refer to the detailed training schedule and the date initially mentioned. You may cross check with the concerned authorities before applying.

The application should be sent to the office of the Controller General of Patents, Designs and Trade Marks (CGPDTM) before May 15, 2017. The office of the CGPDTM will initially scrutinize the applications and send their priority list to JPO, who will take a final call on shortlisting of candidates. Most of the expenses, including air tickets are taken care of by the JPO.

The application form can be downloaded here and the details of the training program can be found here.

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IP filing trends derived from the Indian IP 2015-16 annual report

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The office of the Controller General of Patents, Designs & Trade Marks, commonly referred to as IPO, publishes annual reports with data corresponding to patent, design and trademark filings in India. The IPO recently published the annual report of 2015-16, and we have crunched and analyzed the data to provide some interesting insight. 

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Trademark controversy which “The Nation wants to know”

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An interesting debate has risen over the phrase nation wants to know. The phrase was used frequently by one of India’s most popular news anchors Arnab Goswami, while questioning his guests on a daily primetime live debate called Newshour, aired on Times Now channel owned by Bennett, Coleman & Company Limited (“BCCL”). Arnab later resigned to start a news channel called Republic TV, which is slated to launch in the coming days. According to news reports, Arnab has received a notice from his former employer asking him not to use the phrase on his news channel Republic TV alleging that the phrase is their trademark.

Interestingly, Arnab’s new company ARG Outlier Media Private Limited (“ARG”) has applied for trademark registration of the phrase the nation wants to know (application number – 3467425) and nation wants to know (application number – 3467428). On the other hand, BCCL has applied for trademark registration of the phrase nation wants to know and corresponding logo (application numbers – 3434199 and 3434201).   

Any IP practitioner would agree that getting trademark registration over the phrase nation wants to know for news services is an uphill battel. The phrase would likely be rejected on absolute grounds under Section 9(1)(c). As per said section, trademark registration should be refused if the trademark consists exclusively of marks which have become customary in the current language or in the bona fide and established practices of the trade. There is absolutely no doubt that the phrase under consideration is customary in the current language or in the bona fide and established practices of the news industry.

Section 9(1)(c), however, provides an exception, which allows for registration of such phrases. For such phrases/marks to be registered, the phrase should have acquired a distinctive character as a result of its usage before the date of application for registration or the phrase should be a well-known trade mark. Therefore, one would hope that considering the might of BCCL and Arg, both would have framed a sound legal strategy at least to prove that the phrase has acquired a distinctive character as a result of its usage before the date of application for registration. However, the actions taken by both parties thus far only appear to indicate lack for strategy to further their cause.

BCCL had an excellent opportunity to prove that the phrase has acquired distinctive character as a result of its usage, since the phrase was constantly being used by Arnab, as its employee. However, BCCL, in their trademark applications has submitted that they “propose to use” the mark/phrase. In other words, BCCL is not asserting that they have already been using the phrase, but only propose to use the phrase. In view of this submission, it is unlikely that BCCL will be able to benefit from the exception of Section 9(1)(c), and will most likely be rejected trademark registration at least for news related services.

Arg’s strategy appears to be equally lackluster. ARG being a new entity, with its news channel yet to be launched, would in any case find it difficult to benefit from the exception of Section 9(1)(c), since they have not used the phrase to the extent required by Section 9(1)(c). Therefore, attempting trademark registration would be an effort without any favorable outcome. Nevertheless, there is no harm in filing for trademark registration. A more concrete and supplementary strategy would be for Arnab to assert that he has personality rights over the phrase, since “nation wants to know” is widely considered as Arnab’s style of questioning his guests on TV debates. However, Arnab in his open audio response on YouTube purportedly to BCCL says “Every Indian has a right to use that phrase. And this phrase comes from the heart. Every Indian, through his or her questioning spirit, can use the phrase Nation Wants to Know”.

With this response, Arnab, one of the directors of ARG is in effect appears to be submitting that the phrase has no distinctive character, and hence cannot be a trademark, and more importantly, he submits that he does not have any personality rights over the phrase, which is a way may have a more devastating effect in establishing rights over the phrase.

In conclusion, while the tussle over the phrase “nation wants to know” is interesting, this article tries to draw a broader picture of trademark strategy, and the finer details that can change the course of outcome.

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SIPP Facilitator: Facilitating Patents for the greater good at what cost?

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InvnTree had previously published an article discussing the Scheme for Facilitating Start-Ups Intellectual Property Protection in India, which can be found here.

The Indian Government, in an effort to encourage start-ups in India, launched the Scheme for Facilitating Start-Ups Intellectual Property Protection (SIPP) in January 2016. This scheme was initiated in an effort to reach out to start-ups and protect and promote their Intellectual Property Rights (IPR). Start-ups can avail patent, trademark and design services by paying the required statutory fees excluding professional fees. The Government would pay nominal professional fees for the services related to procuring the IPR to the advocates or patent/trademark agents in charge of handling the IPR process.

Start-ups can avail a complete start-to-end array of services under this scheme, including general advice, assistance in drafting complete/provisional applications, filing applications, preparing and filing responses to examination reports, appearing at hearings, contesting opposition and ensuring the final disposal of the IPR application.

The Government invited advocates, patent agents and trademark agents to sign up for the SIPP scheme. Consequently, several members of the IPR practicing community put forward their names and signed up for it. A public notice regarding guidelines for facilitators and start-ups was released in June 2016, and can be viewed here

The guidelines provided directions to the facilitators and the start-ups on filing and processing applications with regards to patents, designs and trademarks. It also included the fees payable by the government for services rendered by facilitators. The total professional fees for filing a patent and disposing it without opposition was INR 20,000 (approx. USD 333), and for disposing it with opposition services was INR 25,000 (approx. USD 416). Further, facilitators were not allowed to charge more from the start-ups apart from statutory filing fees. Considering the amount of time, work and expertise involved in the patenting process, the fees prescribed for patent services seem to appear far from reality.

The June 2016 guidelines did not provide complete clarity on matters such as whether a facilitator is allowed to decline application requests. However, in March 2017, another public notice was released which was related to such queries regarding the SIPP scheme. The government made it clear that registered facilitators should not charge any fee from the start-ups other than statutory filing fees. The notice further mentioned the occurrence of incidents wherein facilitators did not provide facilitation to start-ups by citing various reasons. The notice cautioned facilitators against such practices. Further, it stated that any act of denial of facilitation to a start-up would be considered as an act of misconduct in their professional capacity which may lead to the removal of their name from the list of facilitators. Additionally, there may be action for the removal of their names from the list of registered Indian patent/trademark agents. The notice can be downloaded here

Team InvnTree works with a lot of startups as well and is always keen to help them out with our expertise. However, in the regard of becoming a facilitator, our team at InvnTree made a conscious decision since the very beginning to not be part of the SIPP scheme. Hence, we did not register as a facilitator. We took into account the level of expertise needed in a niche area such as IPR, and concluded that the professional fees paid by the government are not agreeable for the amount of work that goes into the IPR process with respect to patents in particular.

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Bombay High Court: no infringement in Cipla v. Cipla

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A Full Bench of the Bombay High Court announced their decision in the matter of Cipla Limited v. Cipla Industries Pvt. Ltd. on March 1, 2017. This case explores an important issue in trademark infringement regarding the use of a registered mark in a corporate or trade name, with respect to entities dealing with dissimilar goods/ services.

The Plaintiff, Cipla Limited, is a manufacturer of pharmaceutical products and has registered the trademark “CIPLA” under Class 5, which relates to pharmaceutical products. The Defendant, Cipla Industries, manufactures household items such as ladders and photo-frames, and has registered the trademark “CIPLA PLAST” under Class 21, which relates to household items such as utensils, containers, and combs, among others.

The Plaintiffs filed a suit against the Defendants for trademark infringement and passing off in 2012, claiming that the Defendants are violating the trademark rights of the Plaintiff by using “CIPLA” in their corporate or trade name. Two important things to note about this case are that the Defendant manufactured dissimilar goods when compared to the Plaintiff and the Defendants used the Plaintiff’s registered mark as part of their corporate or trade name.

This case takes precedence from the Raymond Limited v. Raymond Pharmaceuticals case, wherein the textile and clothes manufacturer, Raymond Limited (Plaintiff), alleged that Raymond Pharmaceuticals (Defendant) infringed on the Plaintiff’s trademark “Raymond” by using it in their corporate name.

Trademark infringement of well-known marks is dealt with under § 29(4) and infringement by use in trade or business name is dealt with under § 29(5) of The Trade Marks Act, 1999 as reproduced below:

§ 29(4) A registered trade mark 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—

(a) is identical with or similar to the registered trade mark; and

(b) is used in relation to goods or services which are not similar to those for which the trade mark is registered; and

(c) the registered trade mark has a reputation in India and the use of the mark without due cause takes unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark.

§ 29(5) A registered trade mark is infringed by a person if he uses such registered trade mark, as his trade name or part of his trade name, or name of his business concern or part of the name, of his business concern dealing in goods or services in respect of which the trade mark is registered.

Here, the Court reasoned that in order to establish infringement according to § 29(4), the Plaintiff has to show that the Defendant’s mark is identical or similar to the Plaintiff’s registered mark and that the Defendant is using the mark in relation to goods which are dissimilar to the goods corresponding to the Plaintiff’s registered mark, among other grounds mentioned in § 29(4). Consequently, since the case concerned the use of the registered mark as a corporate/trade name, §29(4) was overlooked in favour of §29(5). However, according to §29(5), infringement is only considered valid in case of “dealing in goods or services in respect of which the trade mark is registered.” Since the two entities in this case dealt with dissimilar goods, namely, textiles and medicines, the Court decided that the Defendants did not infringe on the Plaintiff’s trade mark rights.

The Court did not grant an injunction against Raymond Pharmaceuticals in Raymond Ltd. v. Raymond Pharma., and was of the view that this matter needed reconsideration. Hence, in Cipla Ltd. v. Cipla Industries, the Court sought to clear the matter by outlining four questions that needed to be answered for added clarity on this matter. The questions and their conclusions are as given below.

  1. Where a party is found to be using a registered trade mark as a 'name', viz., as a corporate or trading name or style, though in respect of goods dissimilar to the ones for which the trade mark is registered, is the proprietor of the registered trade mark entitled to an injunction on a cause of action in infringement under Section 29(5) of the Trade Marks Act, 1999?

Conclusion: No.

 

  1. Whether the use of a registered trade mark as corporate name or trading name or style is excluded from the purview of Sections 29(1)29(2) and 29(4) of the Trade Marks Act, 1999, and whether those Sections are restricted to the use of a trade mark 'as a trade mark', i.e., in the 'trade marky' sense?

Conclusion: Yes. The sub-sections will apply in "trademark versus mark" situations.

 

  1. Whether Sections 29(4)and 29(5) operate in separate and mutually exclusive spheres, i.e., whether, if the defendant uses the registered trade mark only as a corporate name or trading name or style in respect of dissimilar goods, a Plaintiff can have no remedy and is not entitled to an injunction?

Conclusion: Yes.

  1. Whether the view taken by the Division Bench in Raymond Ltd V Raymond Pharmaceuticals Pvt Ltd (2010(44) PTC 25 (Bom) (DB)) is a correct view?

Conclusion: Yes.

The Judges noted that § 29(4) uses the terms “in the course of trade” and “in relation to good and services”, which are not present in § 29(5). Further, the Court noted that “as his trade name or part of his trade name, or name of his business concern or part of the name, of his business concern” was not present in § 29(4). The Court made use of this difference to determine that § 29(4) would apply in a “trademark v. mark” situation while § 29(5) would apply in a “trademark v. trade/corporate/business name” situation.

In other words, § 29(5) states that an infringement has occurred with respect to a registered mark only when the goods in question are similar. Since the Plaintiff and the Defendant in this case dealt with dissimilar goods, namely household goods and medicines, the Judges decided that no trademark infringement was committed by the Defendants.

In our opinion, this decision would significantly limit the ability of entities with even well-known registered marks to act against infringement in certain situations. Further, the law regarding this matter seems to leave a loop-hole for potential infringers with dissimilar goods who may use a registered mark in their corporate or trade name.

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Delhi High Court makes a decision in Hybrid Cotton Seeds case

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The Delhi High Court ruled in favour of Nuziveedu Seeds Limited in Monsanto Technology’s case against Nuziveedu on 28th March 2017.

India is the world’s largest producer of cotton, accounting for about 26% of the world’s total cotton production. Naturally, a case concerning the sale of cotton seeds involved in patent and trademark issues becomes important. This decision is related to a particular type of hybrid cotton seeds manufactured by Monsanto Technology called Bt cotton seeds, which are resistant to an insect called Bollworm that has the ability to destroy cotton crops and cause huge losses to farmers.

The Plaintiffs in this case are Monsanto Technology, Monsanto Holdings Private Limited and Mahyco Monsanto Biotech, all part of a multi-national agrochemical and agricultural biotechnology corporation and a leading producer of genetically engineered seeds. The Plaintiffs filed a case against Nuziveedu Seeds Limited, Prabhat Agri Biotech Limited and Pravardhan Seeds Private Ltd. (Defendants), which are Indian agribusiness companies that market seeds and supply hybrid seeds to Indian farmers.

The Plaintiffs alleged that the Defendants continued to market and sell Genetically Modified Hybrid Cotton Planting Seeds despite the termination of sub-license agreements between the Plaintiffs and the Defendants. The Plaintiffs also alleged violation of intellectual property rights of their registered patent (IA 214436) and their trademark sub-licenses for ‘Bollgard’ and ‘Bollgard II’. The Plaintiffs alleged trademark infringement and ‘passing off’ by the Defendants when they sold their products with labels of ‘Bollgard’. The Plaintiffs wanted to initiate a permanent injunction against the Defendants, along with disclosures, recalls of infringing products and award of damages.

RECAP OF PRIOR EVENTS

Monsanto developed and commercialised Bt cotton technology named BG I and BG II, and sub-licensed these technologies to Indian seed manufacturers including the Defendants in 2004, and renewed the license in 2015. A lifetime fee of Rs. 50 lakh was charged along with a recurring ‘trait value’ as compensation. Trait values are generally high, and contribute to a significant cost for the cotton seed producers. However, due to disputes related to the high trait value of the Bt cotton seeds, several states like Andhra Pradesh, Maharashtra, Gujarat and Telangana enacted price-control measures between 2007 and 2009, thus fixing the cotton seed prices and the trait values chargeable by the seed developer. The fixed trait values were significantly lower than the ones charged by Monsanto, making them more affordable for cotton-growing farmers.

In July 2015, Nuziveedu approached Monsanto to discuss charging the cotton seed packets at the trait value rates determined by the local government, and reconciling accounts for the excess trait value that was paid after comparison with the trait value set by the legislation. Monsanto however, refused and sent a notice to Nuziveedu in November 2015 regarding the termination of their sub-license with Nuziveedu for non-payment of duties. Consequently, Nuziveedu and some other seed producers approached the Competition Commission of India (CCI), alleging “abuse of dominant position” and “anti-competition agreements” by Monsanto. Subsequently, the Commission found that Monsanto violated Sections 3 and 4 of the Competition Act, 2002, which involve the allegations mentioned previously.

Meanwhile, during these proceedings, the central government fixed the minimum support price (MSP) and trait value of Bt cotton seed packets for the financial year 2016-2017 for the whole of India under the Cotton Seeds Price (Control) Order, 2015. The MSP for BG I was fixed at Rs. 635 per packet with zero payable trait value and Rs. 800 per packet for BG II, inclusive of seed value, trait value and taxes.

Further, the Government of India published the "Licensing and Formats for GM Technology Agreement Guidelines, 2016" through the Ministry of Agriculture and Farmers Welfare. The Guidelines obliges the licensor and licensees to ensure that all agreements executed by them "fulfil the criteria" provided therein, primarily ensuring non-discriminative licensing to encourage competition and availability of GM cotton seeds to cotton farmers at fair and reasonable prices. In particular, the fourth para of these Guidelines direct the Licensor and the Licensee to conform the sale of cotton seeds with the trait value, seed value and MSP values fixed by the Central Government, for the benefit of cotton farmers.

             Subsequently, the Plaintiffs initiated the present lawsuit in February 2016 before the Delhi High Court. The High Court allowed the Defendants to sell seeds that were manufactured and packed before 30th November 2015 and include the Plaintiff’s trademark on the packaging. The High Court ordered the Defendants not to sell seeds manufactured after that date until further orders of the Court. These directions were subsequently modified by various subsequent orders from the High Court. The next issue of contention involved subsequent seeds that may be reaped from the planted Bt cotton seeds.

            DECISION OF THE HIGH COURT

When the Plaintiffs alleged infringement by the Defendants, the Defendants responded by filing a counter-claim seeking revocation of the suit patent. However, the Court decided not to look into the issue of patent validity at the interim stage as it would have required evidence to be led through a trial.

The Defendants also tried to make use of Section 26 of the Plant Variety Protection Act, which may be used when a new plant variety is registered under the same Act. According to this Act, a party that developed a new plant variety, of which genetic material has been used in an invention, may seek to share potential benefits arising from the invention. The Court rejected the Defendant’s claims related to Section 26.

The Plaintiff on the other hand, argued that their contract allowed the termination of the contract if royalty payments were not received within a fixed period. The Defendant countered that the Plaintiff was required to renegotiate the rates following the revision of cotton seed rates by various State Governments.

The High Court was of the opinion that the termination of the contract by the Plaintiffs was incorrect. The Judge states: “the Plaintiffs were duty bound to consider the request of the defendants as made by the communications beginning July 2015, for modification of the terms as to the rate of trait fee payable under the 2015 sub-license agreements for which the mechanism had earlier been agreed upon in the form of Article 11.03. Since the plaintiffs did not adhere to their obligation under the contract, the demand of payment under the contract terms being not lawful, it apparently being higher than the trait fee permitted by the law in force, the defendants could not have been found to be in default or to have breached their obligations within the meaning of Article 9.02” (Emphasis added)

The High Court emphasized on two points: Article 11.03 of the sub-license agreement between the Plaintiffs and the Defendants, which obliges the parties to keep the contract in accordance with the local laws at all times; and Section 23 of the Indian Contract Act, 1872 which forbids unlawful consideration. Further, the High Court pointed out the illegality of Monsanto’s sudden termination of the contract and hence, upheld the contract between the Plaintiffs and Defendants. Additionally, the Court allowed the Defendants to continue using the technology by paying trait fees in accordance with the prevalent State laws.

This matter related to Bt cotton seeds saw multiple parties playing important roles, from the Plaintiffs and Defendants to the State and Central Governments, including a few other government bodies. However, what comes as a relief is that in the end, the order was favourable towards the real beneficiaries of this situation, namely, the numerous Indian farmers who wish to continue growing cotton crops at reasonable and affordable costs.

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