IPR Laws Archives

Confidential Information

Every person, whether a corporation or an individual has his own secrets and/or information which they consider to be confidential in nature. The question that arises is how does one protect such information, which may be of a commercial nature. Of course, a person may choose never to divulge or disclose his secret or confidential information and in a manner of speaking, take the information to his grave, in which case the question of the information ever being misappropriated cannot and does not arise. However, if one had to divulge or disclose the confidential information for its commercial exploitation, then the question of preventing its misappropriation would surely arise.

If the confidential information is patentable in nature then one may choose to apply for a patent and seek protection. The confidential information which makes up the invention in such a case would be published through the patent office, considering the quid pro quo for the grant of a patent is the disclosure of such confidential information/ invention. However, in lieu of the disclosure the person/ corporation would get statutory protection and a monopoly for the term of the patent.

On the other hand, there may be information which is not patentable but which is otherwise not in the public domain and which is proprietary in nature. Such information would be entitled to protection under the law relating to confidential information. The law relating to protecting confidential information is a part of common law and is based on the broad principles that “If a defendant is proved to have used confidential information, directly or indirectly obtained from the plaintiff, without the consent, express or implied, of the plaintiff, he will be guilty of an infringement of the plaintiff’s rights1 ” and that “It depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it. He must not make use of it to the prejudice of him who gave it without obtaining his consent.2”

A classic example of a Company deriving huge benefits out of its confidential information would be the case of Coca-Cola. The formula/recipe to the soft drink is a closely guarded secret known only to the top officials in the Company. A more local and indigenous example could be of the “Tunday Kebabs” in Lucknow. Before the brothers split a few years ago, it was believed that the recipe to their famous kebabs was known only to the male members of the family and not even revealed to the wives or daughters in the family so as to ensure the confidentiality thereof. Evidently, confidential information can be extremely valuable in certain cases. It is this very branch of law, which would in a sense be the broad basis of the non-disclosure and confidentiality agreements that are drawn up regularly, for example between two companies or between an employer and an employee.

This article is addressed towards explaining the basic concepts of the law relating to confidential information. I shall be addressing the basics of the law of confidential information such as when would the law apply, what information can be considered to be confidential, the springboard doctrine and the necessary requisites a Plaintiff must prove in an action for breach of confidence.

Confidential Information
The first and foremost aspect of the law of confidential information is that it is not restricted to cases of contractual obligations of confidentiality3. Hence, even if parties have shared confidential information with one another without entering into a formal agreement for non-disclosure or protecting confidentiality, the law would protect the disclosure of such information subject to the other requirements, explained hereinafter, being met. Hence, even if an employee was not bound by an express term of confidentiality, he would be bound by an implied duty of good faith to his employer not to use or disclose the confidential information.

At this juncture, it may be relevant to note that there is a distinction between preventing disclosure of confidential information and a clause in restraint of trade. As explained by the Bombay High Court in the case of Star India Pvt. Ltd. vs. Laxmiraj Nayak & Anr.5 , a distinction must be drawn between the confidential information imparted and the skill acquired by the employee. It cannot be said that the employee cannot be permitted to exercise his skill merely because it has been acquired by possessing a trade secret of any one. The Bombay High Court, illustrated its point by stating, inter alia, that “No hospital can prevent a heart surgeon from performing heart surgery in some other hospital by saying that the heart surgeon had acquired skill by performing heart surgeries in that hospital. It is a personal skill which the heart surgeon acquired by experience. Same is the case with the salesman who negotiates with the customer for the sale of the product of his employer. He learns from experience how to talk with different people differently and how to canvas for the sale of the product successfully. He knows the selling points of a particular product by experience. He acquires a good and sweet tongue if he is a salesman dealing with the female folks for the products required by them. He learns the art of tackling the illiterate people. He comes to know how to deal with the old and aged people. He knows the quality of his products. He knows the rates. He might perhaps also be knowing the cost of the products and the profit margin of the employer. All these factors cannot be called trade secrets.” Hence, what can be prevented by an employer is the use and disclosure of the confidential information by an employee but not the exercise of a skill by the employee.

The most important aspect, though would be as to what information can be treated as being confidential in nature. Does information become confidential merely because one entitles it as such. Is information to be treated as confidential merely because one party asserts it to be confidential. To illustrate, can Company A in a contract with Company B assert that information pertaining to the composition of its Board of Directors is confidential and cannot be divulged? To my mind, the answer to this question would be in the negative since this information would otherwise be available from a search of the records of the Registrar of Companies and would as such be in the public domain.

Thus, broadly speaking it is information which is not available in the public domain and which therefore, can be treated as being proprietary in nature that could be treated as being information which is confidential in nature. Even, at times information which is otherwise in the public domain may be treated as confidential since the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process6 .

The information must have a significant element of originality not already known in the realm of public knowledge. The originality may consist in a significant twist or slant to a well known concept. The originality may also be derived from the application of human ingenuity to well known concepts7. An example of a case where the originality of the information came from an application to a well known concept would be the “Swayamvar” case before the Delhi High Court. In that case, the Plaintiff sought to protect the idea of a TV show based on the concept of a Swayamvar. Even though the concept of a swayamvar was a well known concept and as such in the public domain, the Delhi High Court observed that “The novelty and innovation of the concept of the plaintiff resides in combining of a reality TV show with a subject like match making for the purpose of marriage. The Swayamvar quoted in Indian mythology was not a routine practice. In mythology, we have come across only two Swayamvars, one in Mahabharat where the choice was not left to the bride but on the act of chivalry to be performed by any prince and whosoever succeeded in such performance got the hand of Draupadi. Similarly, in Ramayana choice was not left to the bride but again on performance of chivalrous act by a prince who could break the mighty Dhanusha (Bow). Therefore, originality lies in the concept of plaintiff by conceiving a reality TV programme of match making and spouse selection by transposing mythological Swayamvar to give prerogative to woman to select a groom from a variety of suitors and making it presentable to audience and to explore it for commercial marketing. Therefore the very concept of matchmaking in view of concept of the plaintiff giving choice to the bride was a novel concept in original thought capable of being protected.8 ”

Hence, in each case, the confidential information would have to be identified with a degree of certainty and merely by entitling the information as confidential, the same would not become confidential. The person claiming the information to be confidential must be in a position to identify and assert how the information he claims to be confidential is in fact such information as is not available in the public domain and contains the element of originality as required in such cases.

Another facet of what information may be claimed as confidential pertains to cases where the information is partly public and partly private. In such cases also, the Courts have held that where confidential information is communicated in circumstances of confidence the obligation thus created would endure even after all the information has been published or is ascertainable by the public so as to prevent the recipient from using the communication as a spring-board9 . In Seager vs. Copydex Ltd.10 the Court, observed, inter alia, that “As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a spring-board for activities detrimental to the person who made the confidential communication, and spring-board it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public …The law does not allow the use of such information even as a spring-board for activities detrimental to the plaintiff.”

The spring board doctrine refers to the fact that the recipient of information which is partly public and partly private cannot take advantage of the private information to spring board the development of his activities. As explained by Lord Denning, when information is mixed as in partly private and partly public, then the recipient must take special care to use only the material which is in the public domain11 .

Hence, the necessity and/or importance of identifying the confidential information would be paramount. Identifying the confidential information, however, is only but one aspect of what a Plaintiff would be required to prove in a case filed for breach of confidence. As held by the Bombay High Court in the recent case of Beyond Dreams Entertainment Private Limited vs. Zee Entertainment Enterprises Limited12, a Plaintiff would be required to prove three elements viz. that firstly, it must be shown that the information itself is of a confidential nature, secondly, it must be shown that it is communicated or imparted to the defendant under circumstances which cast an obligation of confidence on him. and that thirdly, it must be shown that the information shared is actually used or threatened to be used unauthorizedly by the Defendants, that is to say, without the licence of the Plaintiff. The High Court also observed that each one of these three elements had its own peculiarities and sub-elements.

Thus, in every case of breach of confidence, a Plaintiff would be required to plead and prove the aforesaid factors. A plaintiff to succeed in a case for breach of confidence would not only have to identify that the information imparted was confidential but also show that it was imparted under circumstances which implied a relationship of confidence and that there has been a threat to disclose and/or divulge such information.

Conclusion
Whilst the law on the subject is extremely vast, I hope that the above summarisation of the basic concepts of the subject, would make clear the minimum requirements that must be borne in mind whilst dealing with confidential information. The draftsman of a contract or a plaint would have to endeavour to determine whether or not there is any confidential information involved and to identify the same. It must be made clear to the recipient of the information that the information being shared is confidential in nature and cannot be divulged. It may be appreciated that it is very important to understand and identify what information is in the public domain and what information is private. It is essential that parties and/or draftsmen endeavour to identify the information which is not in the public domain and/or which cannot be arrived at without applying one’s mind. Parties must bear in mind that merely by labelling information as confidential it would not become confidential and that certain information even though not labelled confidential if given in circumstances implying confidence may be protected.

An endeavour has been made to codify the subject, by the Department of Science and Technology, by publishing a draft legislation titled the National Innovation Act of 2008, the preamble to which provides that it is, inter alia, “An Act to … codify and consolidate the law of confidentiality in aid of protecting Confidential Information, trade secrets and Innovation.” The draft legislation has however, not yet seen the light of the day and we continue to be governed by the vast amount of case law based on the common law principles of preventing breach of confidence.

shailesh.kwebmaker

Domain Names

A domain name, to put it simply, is a host-name that identifies Internet Protocol (IP) resources such as a website.1 For example www.kodak.com is the domain name of the website belonging to the Kodak Corporation. If one were to type the above domain name into the browser of their computer they would be directed to the relevant web page belonging to the Kodak Corporation. The Internet, as is well known, is a global network of networks whereby several computers are interconnected to each other. A domain name, thus, enables one computer to reach a particular web page/website and access the desired content.

In the context of the development of e-commerce, the importance of a domain name and its protection to a modern-day businessman is immense. A domain name consists of a top-level domain name and a second-level domain name. The top-level domain name in the above example would be ‘.com’ whilst the second-level domain name would be ‘kodak’. A common practice these days is to have a second-level domain name which consists of the trade mark and/ or trade name of the business as is evident from the said example. Hence, the wrongful use by a third person of a domain name could be extremely harmful to the goodwill, reputation and business of the owner of the domain name. Thus, the primary question which arises is whether a domain name which may consist of a trade mark or trade name can be protected as a form of intellectual property.

However, before dealing with the law on the aspect of protecting domain names, it would be important to have a basic understanding from the technical standpoint as to how the Internet functions and what is the role of a domain name, etc. in order to effectively understand the role of a domain name in practice.

Working of the Internet
As is well known, the Internet is a network of networks. Hence, a fundamental requirement would be that there must exist a system of locating one another as in locating different computers.

The system as it currently exists is that at one end is the user accessing the Internet from, usually, a computer. At the other end is a server, on which is stored in electronic form, the website which the user wishes to access. The user gains access to the Internet at a gateway, either via an internet service provider (ISP) or via a smaller, usually internal, network called an Intranet. In the middle is a highly sophisticated network comprising router and other computers linked together. Each computer connected to the Internet has a unique numerical address known as the Internet Protocol address (for example, 1.256.123.123) so that electronic information is delivered to the right place. To make these identification numbers more user-friendly, they can be associated with identifiers consisting of alphanumeric characters. These identifiers are Internet domain names. Because they are made up from alphanumeric characters, it is possible for the sequence of characters to spell out words and hence trade marks or other signs used by businesses2.

When the Internet was in its infancy, the system of registering domain names was done through a department of the Government of United States of America. However in the 1990s the United States Government put together an interagency working group to formulate a policy on privatising the domain name system. The idea of a new private non-profit corporation to administer the domain name system evolved into the setting up of the ICANN (Internet Corporation for Assigned Names and Numbers). ICANN was formed in 1998 and is a corporation with participants from all over the world dedicated to keeping the Internet secure, stable and interoperable. The ICANN allows different registrars to register domain names for use on the internet. ICANN, however does not control the content on the domain.

Law in India
Now let us examine the legal position in India on the protection of a domain name as a form of intellectual property. The issue is no longer res integra and has been answered categorically by the Supreme Court in the case of Satyam Infoway Limited v. Sifynet Solutions Private Limited3. The respondent in the said appeal had raised the defence that a domain name is merely an address on the Internet. The registration of a domain name with ICANN could not confer any intellectual property right, since the same was a contract with a registration authority allowing communication to reach the owner’s computer via Internet links channelled through the registration authority’s server which was in a way akin to registration of a company name which is a unique identifier of a company but by itself confers no intellectual property rights. The Apex Court, however, negatived the said contention and held, inter alia, as under;

“The original role of a domain name was no doubt to provide an address for computers on the Internet. But the Internet has developed from a mere means of communication to a mode of carrying on commercial activity. With the increase of commercial activity on the Internet, a domain name is also used as a business identifier. Therefore, the domain name not only serves as an address for internet communication, but also identifies the specific Internet site. In the commercial field, each domain name owner provides information/services which are associated with such domain name. Thus a domain name may pertain to provision of services within the meaning of section 2(z). A domain name is easy to remember and use, and is chosen as an instrument of commercial enterprise not only because it facilitates the ability of consumers to navigate the Internet to find websites they are looking for, but also at the same time, serves to identify and distinguish the business itself, or its goods or services, and to specify its corresponding online Internet location. Consequently a domain name as an address must, of necessity, be peculiar and unique and where a domain name is used in connection with a business, the value of maintaining an exclusive identity becomes critical. “As more and more commercial enterprises trade or advertise their presence on the web, domain names have become more and more valuable and the potential for dispute is high. Whereas a large number of trademarks containing the same name can comfortably co-exist because they are associated with different products, belong to business in different jurisdictions, etc., the distinctive nature of the domain name providing global exclusivity is much sought after. The fact that many consumers searching for a particular site are likely, in the first place, to try and guess its domain name has further enhanced this value”. The answer to the question posed in the preceding paragraph is therefore an affirmative.”

The Apex Court, further held that the use of the same or similar domain name may lead to a diversion of users. Diversion of users means that a person may be directed to another website instead of the website he desires to access. To illustrate consider a case where a user is searching for www.kodak. com, but inadvertently types www.kodake.com into the Internet browser or a search engine and is then directed to the webpage of some third party, this would mean that he has been diverted away from the webpage he sought access to. This would be a form of passing of wherein the user of the mark ‘kodake’ is using the goodwill of the mark ‘kodak’ to divert customers to his website. This could impact e-commerce and its features of instant accessibility to users and potential customers and particularly so in areas of overlap between the two domains. Ordinary consumers/ users seeking to locate the functions available under one domain name may be confused if they accidentally arrived at a different but similar website which offers no such services. Such users could well conclude that the first domain name owner had mis-represented its goods or services through its promotional activities and the first domain owner would thereby lose their custom. It is apparent therefore that a domain name may have all the characteristics of a trade mark and could be protected as such.

Thus, the Apex Court squarely holds that a domain name can be protected as a trade mark. Hence, the proprietor of a trade mark may prevent a wrongful use of a domain name which is identical with and/or deceptively similar to its trade mark by filing proceedings for infringement and/ or passing off.

One factor which must be noted though is that whilst a trade mark is territorial, inasmuch as it would normally be registered within each country separately and protected by the laws of that country, a domain name is registered and used in cyberworld bereft of national boundaries. Thus protection under the national legal system of a country may not always suffice.

To illustrate if Kodak Corporation filed a suit in India against an infringer for injunctive orders against the use of the domain name ‘kodak. com’, the order of the Indian Courts would only be effective within the territory of India and not beyond, even though the infringing website can be accessed from anywhere in the world. Hence, in order to provide a solution to overcome this hurdle, the ICANN adopted the Uniform Dispute Resolution Policy (UDRP).

Uniform Dispute Resolution Policy

The UDRP is a dispute resolution mechanism set up by the ICANN based on the report of the World Intellectual Property Organisation (WIPO). India is one of the 171 countries of the world, who are members of WIPO. WIPO was established as a vehicle for promoting the protection, dissemination and use of intellectual property throughout the world.

The UDRP is incorporated by reference into every agreement for registration of a domain name. The UDRP states that if a third party complainant asserts to the relevant Registrar of domain name that the impugned domain name is identical or confusingly similar to the complainant’s trade mark or that the alleged registrant of the domain name has no rights or legitimate interests in respect of the domain name or that the domain name is being used in bad faith, then the dispute will be submitted to a mandatory administrative proceeding.

Thus, under the UDRP a complaint may be filed by any party based on the criterion required by the policy for either cancellation or transfer of the domain name. The proceedings are heard and decided by the members of the administrative panel. It may be relevant to note that the said mandatory administrative proceeding does not bar recourse to Courts and that the policy provides that either the complainant or the registrant may approach a Court of competent jurisdiction for independent resolution of the disputes before the administrative proceedings are commenced or after they are concluded. In fact, even an order of the administrative panel is not to be executed for a period of 10 days after it is passed to enable the registrant to approach a Court of competent jurisdiction. In such a case, the panel’s decision would normally stand stayed till the outcome in the lawsuit4.

Thus, any person aggrieved by the wrongful use of a domain name has in principle two routes available to him. The person aggrieved may initiate an action for infringement and passing off under the trade mark law in a Court of competent jurisdiction, if the other requirements are met and may also file a complaint under the UDRP for cancellation and/or transfer of the impugned domain name.

Cybersquatting

At this juncture, before concluding, I would like to draw attention to one of the most common problems faced with respect to wrongful use of domain names i.e., cybersquatting. Cybersquatting (also known as domain squatting), according to the United States federal law ‘Anticybersquatting Consumer Protection Act’, is registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trade mark belonging to someone else. The cybersquatter then offers to sell the domain to the person or company who owns a trade mark contained within the name at an inflated price5.

This is a very nefarious and prevalent practice. Cybersquatters register several trade-marks as domain names and then hoard them, so that the true owner cannot register a domain name in consonance with its trade mark. At this stage the cybersquatter would then offer to sell the domain name to the true owner of the trade mark thereby making a wrongful profit. A recent illustration of this in the Indian context would be the case of Mr. Arun Jaitley. Mr. Jaitley wanted to register a domain name with his name, but was informed that the domain name www. arunjaitley.com was already registered. The Delhi High Court after considering the several facts involved in that matter was pleased to direct transfer of the domain name and grant punitive damages6.

Another form of cybersquatting would be where the top-level domain name is changed to make several different domain names, such as www.arunjaitley.in or www.arunjaitley.org. In such cases also protection may be sought as in the earlier case.

The problem of cybersquatting is rampant and very serious, hence in addition to the protection already available under the law relating to trade marks and under the UDRP, it may be important to draft a specific legislation to meet with and provide an efficacious remedy against such cyber-squatters. The primary need for such a legislation is obvious inasmuch as the prevalent laws do not deal with such situations, but Courts have by broadly interpreting the prevalent statutes carved out remedies.

Considering the importance and prevalence of the Internet in our lives today, it stands to reason that a domain name is a very valuable property. Second-level domain names which normally tend to consist of the trade mark of a business are the key identifiers to enable a consumer to reach the address/ webpage he wishes to access. There may be cases where a consumer reaches a website only to find that the webpage does not belong to the host he is looking for however, the damage of diversion is already done. Hence, it is imperative that all trade mark owners even if they do not maintain a presence in cyberspace ensure that no wrongful use and/ or deceptive use of their trade mark is being used. Such vigilance is necessary to ensure protection of the trade mark and the goodwill and reputation therein as also to prevent unwary consumers from being deceived.

shailesh.kwebmaker

JURISDICTION IN MATTERS RELATING TO VIOLATIONS OF INTELLECTUAL PROPERTY RIGHTS INCLUDING IN CYBERSPACE

IPR Laws

Having considered what acts constitute infringement of a
registered trademark and copyright as also passing off, the next essential
question which arises is which Court would have the jurisdiction to try,
determine and dispose of a suit relating to the said issue. It may be
appreciated that apart from general rules of procedure which lay down the law
for the purposes of determining the jurisdiction of a Court, special provisions
are to be found in the Trade Marks Act, 1999 and the Copyright Act, 1957
(hereinafter referred to as the ‘Trade Marks Act’ and the ‘Copyright Act’,
respectively) which confer jurisdiction on additional fora. This month’s article
seeks to give an overview of the provisions which determine the jurisdiction of
a Court, in matters relating to violation of rights in trademarks and copyright,
with special reference to determining jurisdiction in respect of matters
relating to websites.

Code of Civil Procedure, 1908 :

The general rules for determining the jurisdiction of a Court
are to be found in S. 15 to S. 20 of the Code of Civil Procedure, 1908
(hereinafter referred to as ‘the CPC’). These provisions, inter alia, lay
down that in the first instance, a suit must be filed in the Court of the lowest
grade competent to try it. In suits for land, the same are to be filed where the
immovable property in dispute is situated. In other cases, the suit is to be
filed either where the defendant carries on business and/or actually and
voluntarily resides and/or works for gain or where the cause of action has
arisen. Hence, under the CPC, if an owner of copyright and/or registered
proprietor of a trademark wished to institute proceedings against an infringer,
he would be obliged to follow the infringer to wherever he resides and/or to the
place where the infringing goods are being sold. This would mean that, if
someone were selling goods bearing infringing trademark in a remote part of
Assam and only had an existence in that limited area, the proprietor of the
trade-mark, who may be situated in Kerala, would have to follow the said
infringer all the way to Assam and sue him there.

Special provisions :

In order to overcome this handicap/difficulty, certain
additional provisions for determining the jurisdiction of a Court are to be
found in the Trade Marks Act and the Copyright Act. S. 62 of the Copyright Act
and S. 134 of the Trade Marks Act, inter alia, allow a plaintiff i.e.,
the owner of the copyright and the registered proprietor of a trademark,
respectively, to initiate and file an action for infringement in the District
Court having jurisdiction to try the suit which shall include a District Court
within whose jurisdiction the person instituting the suit or proceeding actually
and voluntarily resides or carries on business or personally works for gain.

It may be noted that even though the provisions of S. 62 of
the Copyright Act have existed since 1957, no such provision was to be found in
the earlier Trade and Merchandise Marks Act, 1958. The Trade Marks Act
introduced such a provision for the first time in 1999. It may also be
appreciated that S. 134 of the Trade Marks Act allows a plaintiff to file a suit
where he actually and voluntarily resides or carries on business or works for
gain only in respect of the cause of action for infringement of registered
trademark and not for passing off. Hence, there could be situations where a
Court may have jurisdiction for the purposes of the cause of action of
infringement, but not for passing off. To illustrate, let us take a situation
where Hindustan Unilever Limited being the registered proprietor of the
trademark ‘DOVE’ having its registered office in Mumbai wants to sue a person
manufacturing and selling soaps, under an identical trademark, only in Ludhiana.
In such a case, since the defendant is neither itself present within the
jurisdiction of the Mumbai Courts, nor are its products available within Mumbai,
the plaintiff would be unable to file a suit for passing off in Mumbai. However,
in light of S. 134 of the Trade Marks Act, Hindustan Unilever Limited would be
entitled to file an action for infringement of its trademark in Mumbai. In such
cases at a practical level, the normal practice followed by lawyers in Mumbai,
would be to file a combined suit for both causes of action in Mumbai and then
seek leave under Clause XIV of the Letters Patent for joinder of causes of
action, thereby giving the Court at Mumbai jurisdiction to try, determine and
dispose of the suit in respect of both the causes of action. Clause XIV of the
Letters Patent is a provision whereby the Bombay High Court is empowered to
combine causes of action so as to, inter alia, avoid multiplicity of
proceedings.

Hence, in a matter relating to infringement of rights in a
trademark or copyright the above principles would apply for the purposes of
determining jurisdiction.

Websites :

The application of the above principles is relatively simple
in the real world, but causes quite a few problems when applied to the virtual
world or in cyberspace. In cases where the defendant is not resident within the
jurisdiction of the Court, but jurisdiction is sought to be fixed on the basis
that the cause of action has arisen within the jurisdiction of that Court,
several difficulties arise. It may be noted that in cases where the infringing
mark or work is found only on a website, the question which arises is under
which circumstances can it be said that a cause of action be said to have arisen
within the jurisdiction of that Court and under what circumstances can a Court
exercise jurisdiction over a website. This question has vexed lawyers and
jurists over the years as to in what circumstances can a Court exercise
jurisdiction over websites published on the worldwide web. Would the mere
accessibility of a website from within the territory of the Court confer
jurisdiction on that Court or is something further required to determine and
establish a cause of action. A website, under normal circumstances, would be
accessible to everyone in all countries. Hence, in such a case can it be said
that a cause of action arises in every jurisdiction, thereby allowing the
plaintiff to sue anywhere where the website is accessible.

This question of seminal importance has recently been
answered by a Division Bench of the Delhi High Court in Banyan Tree Holding
Private Limited v. A. Murali Krishna Reddy¹ wherein the matter
had been referred by a Learned Single Judge to the Division Bench to determine
the law applicable for determining jurisdiction over a website.

The facts of the said case were that neither the plaintiff nor the defendant had their offices within the jurisdiction of the Delhi High Court, but the suit for passing off was brought on the basis that the defendant’s website which used the impugned mark ‘Banyan Tree Retreat’ was accessible in Delhi through the website of the defendant which was not a passive website and was an interactive web-page. The concept of a passive website as against an interactive website has been evolved by Courts for the purpose of determining jurisdiction as will be evident from the following.

The Division Bench, in light of the above facts, formulated and answered the following question— What principles would apply to determine jurisdiction in passing off or infringement actions where the plaintiff was not carrying on business within the jurisdiction of the Court, but the defendant was hosting a website within the jurisdiction of that Court?

In order to answer this question, the Division Bench made a detailed analysis of the law as it stood in the U.S.A., U.K., Canada, Australia and India. The Division Bench examined how several theories have been propounded over the years for the purposes of determining jurisdiction in cyberspace.

A vast plethora of judgments of US Courts was considered on the subject and it was found that initially, the Courts in the USA used to apply the ‘Purposeful Availment’ theory which was later modified to the ‘Zippo Sliding Scale Test‘ which was thereafter modified to the ‘Effects Test.’

The Purposeful Availment theory was initially pro-pounded by the U.S. Supreme Court in International Shoe Co. v. Washington2, wherein it was held that in order to establish jurisdiction over a particular defendant the plaintiff had to show that the Defendant had minimum contacts in the forum State, i.e., the State in which the plaintiff desired to institute his action, and that the defendant must have purposefully availed of the privilege of conducting activities in the forum state. Under this theory, it was found that the Courts were tending to exercise jurisdiction over websites merely on the basis that they were accessible within the jurisdiction of the forum court. However, it was later clarified that the effect of creating a site may be felt nationwide or even worldwide but without more, it would not be an act purposefully directed towards the forum State3. This led to the concept of whether a website could be categorised to be a passive website or an interactive website and that the purposeful avail-ment theory would be satisfied only if the website were interactive to a degree that reveals specifically intended interaction with the residents of the forum state4.

Hence, questions then arose as to whether websites were passive or interactive and if interactive, what was the level of interactivity needed to establish jurisdiction. This led to the Zippo Sliding Scale test wherein the Court set out a three-pronged test being that the defendant must have minimum contacts with the forum state, the claim asserted must arise out of those contacts and that the exercise of jurisdiction must be reasonable5. The Courts, however, then felt that since almost all websites are interactive to a certain extent, a shift was necessary so as to examine in each case, the nature of the activity performed using the interactive website.

In light of the above, the effects test was pro-pounded in Calder v. Jones6 wherein it was held that for the purposes of determining jurisdiction, it was essential to identify where the effect of the website would be felt i.e., at whom and/or where was it targeted.

The effects test however, did not find favour in its application to trademark infringement cases since it was felt that the effects test as would be applicable to an individual would not be applicable to a corporation/company, since a company would not suffer harm in a particular geographic location in the same sense that an individual would7.

The Division Bench then summarised the law in the U.S.A. as being that a plaintiff would have to show that the defendant purposefully availed of the jurisdiction of the forum state by specifically targeting the customers within the forum state.

The Division Bench also considered the law in the U.K., Canada and Australia before dealing with the limited Indian law on the subject. A perusal of these foreign judgments explains the fact that mere access to a website would not confer jurisdiction on a Court and that something more would be needed.

It was in light of the above, that the judgment of a Single Judge of the Delhi High Court in Independent news Service Pvt. Ltd. v. India Broadcast Live LLC8 was referred to. The finding in that case was that in order to exercise jurisdiction over a website it was essential to show that the website was interactive and that the level of interactivity involved would also be relevant.

The Division Bench has, however, gone a step further after considering all the law on the subject and has, inter alia, laid down that:

“This Court holds that jurisdiction of the forum court does not get attracted merely on the basis of interactivity of the website which is accessible in the forum state. The degree of the interactivity apart, the nature of the activity permissible and whether it results in a commercial transaction has to be examined. For the ‘effects’ test to apply, the plaintiff must necessarily plead and show prima facie that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the Plaintiff within the forum state. For the purposes of a passing off or an infringement action (where the plaintiff is not located within the jurisdiction of the court), the injurious effect 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. Naturally therefore, this would require the presence of the Plaintiff in the forum state and not merely the possibility of such presence in the future. Secondly, to show that an injurious effect has been felt by the Plaintiff it would have to be shown that viewers in the forum state were specifically targeted. Therefore the ‘effects’ test would have to be applied in conjunction with the ‘sliding scale’ test to determine if the forum court has jurisdiction to try a suit concerning internet based disputes.”

Thus, it would be evident that in order to establish that a cause of action has arisen within the jurisdiction of a particular forum, it would be necessary for the Plaintiff to prima facie establish that the defendant’s website which contains the infringing material is specifically targeting customers within the forum state and that the same has caused injury or harm to the Plaintiff within the jurisdiction of that forum not merely whether a website is active or passive.

In my opinion, the above judgment, though lays down certain guiding principles as to how a court can exercise jurisdiction over infringing acts in cyberspace, it still leaves many questions unanswered such as what is the level of injury or harm necessary to establish jurisdiction or how is one to determine and identify cases of specific targeting, what would happen in cases where the targeting is of specific individuals who are normally resident in another forum but have accessed the website within a different forum, etc. These issues still remain unanswered and one can only hope that they will be answered in due course of time. The only solace is that a lamp has been handed down by the Division Bench, which will, hopefully, light the path as we walk along and lay down and make more specific the law on the subject.

Nirav Shah

Trade mark Licensing — Quality Control

IPR Laws“What’s in a name ? That which we call a rose, by any other name would smell as sweet.”
— Juliet from Romeo and Juliet, Shakespeare.

Businessmen today may however choose to disagree with this oft-quoted Shakespearian view, for in the current era, a name as in trade marks or brand names is an extremely valuable asset. Companies, in fact, incur huge expenditure to promote, establish and protect their trade marks and also, in turn, reap benefits of the repute of their trade mark. To quote Mr. Pierre Cardin, “My name is more important than myself.”

A trade mark is normally exploited in two ways, firstly by the proprietor using the trade mark himself in respect of his goods or services and secondly, by the proprietor licensing the trade mark to others. For the purposes of this article, I shall be dealing primarily with the latter.

Licensing of Trade marks

A trade mark licence has been defined as ‘a contractual arrangement whereby a trade mark owner permits another to use his trade mark, where but for the licence the other would be a trade mark infringer.’1 Therefore, licensing of a trade mark is a process whereby a trade mark owner allows, permits and/or authorises another entity the right to use the trade mark, subject to the terms and conditions specified in the licence.

A trade mark licence could be exclusive or non-exclusive in nature. An exclusive licence is one where the licensee is allowed to use the trade mark to the exclusion of everyone else, whereas in case of a non-exclusive licensee there could be more than one licensee.

The Trade Marks Act, 1999 (‘the Act’) does not contain a definition of a trade mark licence, however, it defines the term “permitted use”. Section 2(r) de-fines permitted use in relation to a registered trade mark to mean, inter alia, use by a registered user or use by a person other than the registered proprietor or registered user in relation to the goods and services, subject to other conditions mentioned therein.

The Act defines a registered user to mean someone who is registered as such u/s.49 of the Act. A registered user, put simply, is also a licensee of a registered trade mark, but one who has been so registered under the Act. Such registration can give additional benefits to a registered user such as a right to institute infringement proceedings in his own name.

It may be relevant to note that the definition of permitted use under the Act is broader than the definition of permitted use under the Trade and Merchandise Marks Act, 1958, whereunder only a registered user was recognised as being a permitted user. The new Act, however, clearly recognises use by a registered user or use by any person other than the registered user and the registered proprietor. Hence, statutorily a new category of permitted user has now been recognised. Licensing of unregistered trade marks is commonly known as common law licensing and is governed by the general principles of trade mark law and contract.

Thus, in a nutshell a trade mark licence is an agreement whereby a trade mark owner (licensor) agrees and allows a licensee to use the trade mark for either manufacturing, distributing, selling, etc. products under the licensed trade mark. If not for the licence, use by any other person of a trade mark would be in violation of the trade mark owner’s rights in and to the trade mark.

There are several important conditions that are to be considered whilst drafting a trade mark licence such as the specific goods in respect of which the trade mark is to be licensed, the territory of use, etc. One of the essential factors to be considered while licensing a trade mark is to ensure the maintenance of quality control and/or supervision by a licensor over his licensee in respect of the goods and/or services to be manufactured, sold and/or marketed under the licensed trade mark, for in the absence of such a provision and effective exercise thereof, certain adverse consequences, as are explained hereinafter, as to the licensed trade mark could follow.

Concept/Function of a Trade mark

In order to appreciate the relevance and necessity of maintaining quality control and supervision by a licensor over a licensee, it would be helpful to understand the concept of a trade mark.

Trade marks have evolved from being a strict badge of physical origin2 to being quality and source indicators,3 from being non licensable to being extensively licensed, etc.4

The original purpose of trade marks was to indicate ownership. However, with the development of commercial trade, trade marks have come to serve a different function — identification of the source of goods offered for sale in the market place.5 The recognition of a trade mark as a special form of property right, based on the goodwill embodied in the mark, was integrally linked with the notion that the mark served to indicate the source of the goods.6

The Act defines a trade mark, inter alia, as being” a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others …. a mark used or proposed to be used in relation to goods or services for the purpose of indicating or so as to indicate a connection in the course of trade between the goods or services, as the case may be, and some person having the right, either as proprietor or by way of permitted use.’7

Thus, it may be appreciated that the primary function of a trade mark is, inter alia, to indicate a connection in the course of trade between the proprietor of the trade mark and his goods or services. Hence, a causal connection must be maintained between the goods or services and the proprietor of the trade mark. The reasoning and/ or rationale for maintaining this causal connection could be attributed to the fact that a trade mark indicates to a consumer the source from which the goods or services emanate and consequently, a certain quality as associated with that source and it is on this basis that the consumer buys certain trade-marked goods as opposed to others.

It may be appreciated that at early common law, trade mark proprietors generally were not permitted to licence their marks to others because trade marks were viewed solely as indicators of physical source of goods.8 However, trade mark licensing was subsequently sought to be permitted so long as the trade mark owner exercised control over the quality of the trade marked goods that were produced by the licensees.9 This is also reflected in a judgment of Lakshmanan J., wherein the Learned Judge has held that,

“These changes have been reflected in our statutory trade mark law in, for example, the broadening of the definition of a trade mark, in the recent provisions of assignment without goodwill and in the recognition in the registered user provisions that a trade mark can be licensed without causing deception or confusion, provided the owner of the trade mark retains control over the character and quality of the goods sold under the mark.”10

It may also be appreciated that the Hon’ble Supreme Court has held that licensing of a trade mark,

“is permissible, provided (i) the licensing does not result in causing confusion or deception among the public; (ii) it does not destroy the distinctiveness of the trade mark that is to say, the trade mark, before the public eye, continues to distinguish the goods connected with the proprietor of the mark from those connected with others; and (iii) a connection in the course of trade consistent with the definition of trade mark continues to exist between the goods and the proprietor of the mark.”11

Quality Control

Quality control and/or supervision of a licensee by a licensor is imperative so as to ensure that there is no confusion amongst the public as to the nature of the goods manufactured, sold and/or marketed under the trade mark. To illustrate, let us take a case where A has licensed his trade mark to Band C to manufacture and sell certain goods under his trade mark. Now, if A were not to maintain quality control and / or supervision over the goods manufactured by either B or C or both, a situation could arise where the goods manufactured by Bare of poorer quality than those manufactured by C or vice versa or that the goods are generally not of the quality which is associated with A. Thus, in such a situation, confusion and/or deception would arise in the market place which could be harmful to the consumers. It is in order to prevent such harm from arising to a consumer that the licensor is required to maintain quality control and/ or supervision over his licensee so as to ensure that a “connection in the course of trade” remains between himself and his goods or services. This protects consumers who rely on the quality statement made by a trade-marked product from being misled as to the quality of the product.

Further, it may be appreciated that in such a case the public would associate goods sold under the trade mark as emanating from A or in any event, as indicating that all the goods sold under the said trade mark since they emanate from a single source as being of identical quality, but since no effective control is being maintained by A i.e., the proprietor of the trade mark, this would result in the trade mark not being able to perform one of its essential r functions. Consequently, the rights in the trade mark would get diluted/ diminished as the trade mark would no longer indicate a connection in the course of trade or provide the assurance of consistent quality. Thus, it could be urged that the licensor has abandoned his trade mark and therefore, the trade mark is no longer distinctive of his goods and hence, may be rectified and/or removed from the Register of Trade Marks.

Quality control must not be understood to mean that the goods or services must be of a high quality but that they must be of a consistent quality, since that is the assurance which a consumer relies on whilst availing himself of a particular trade-marked product or service.

It may also be noted that US Courts have constantly found that licensing without quality control or naked licensing is “a fraud on the public and unlawful”12 and “is inherently deceptive and constitutes an abandonment of all rights in the trade mark and results in cancellation of its registration.”13 Even in U.K., Courts have held that the grant of a bare licence (i.e., a licence without quality control) could result in the proprietor losing his rights in and to the trade mark.

The Act also empowers the Registrar of Trade Marks in this regard to vary or cancel the registration of a registered user on the ground that any stipulation in the agreement between the registered proprietor and the registered user regarding the quality of the goods or services in relation to which the trade mark is to be used is either not being enforced or complied with.14 This power may be exercised even suo mota by the Registrar.

Hence, it is urged that uncontrolled licensing or licensing without quality control also known as naked licensing (USA) or bare licensing (U.K.) can have negative effects on the licensor’s rights in and to the trade mark.

The Scandecor Judgment

It may be appreciated that Courts normally apply a per se rule to cases where absence of quality control is pleaded, that is, once a case is made out of absence of quality control, it is assumed that the trade mark has been abandoned and/or that the trade mark owner ceases to control the trade mark and hence, the same must be rectified and/or removed form the Register of Trade Marks. Thus, whilst applying a per se rule no further factual inquiry is necessary to establish whether the trade mark has actually been abandoned or whether it has lost its distinctiveness after the absence of quality control has been established.

A different view, however, has been taken by the House of Lords in the U.K. in the case of Scandecor Development AB v. Scandecor Marketing AB et al.15 The House of Lords, in the instant case, was dealing solely with use by an exclusive licensee and held in this regard that it was no longer appropriate to apply the per se rule, but that it would be more beneficial to adopt case by case analysis in such matters. Their Lordships held that customers do not rely on a legal guarantee of quality assurance, but rather on the trade mark owner’s economic interest in protecting his trade mark and hence, in the event of absence of quality control by the proprietor of the trade mark, a further enquiry should be made to determine whether or not the trade mark has actually been abandoned and / or lost its distinctiveness. It may be noted that the House of Lords does not hold that quality control is not necessary, but only holds that mere lack of it should not result in a presumptive finding of abandonment and that a further inquiry would be necessary in such case. Also it may be noted that the said judgment only dealt with the case of an exclusive licensee.

In light of the above, it must be appreciated that if effective quality control is not maintained by the licensor, adverse consequences as regards the distinctiveness of the trade mark would follow. Uncontrolled or naked licensing may result in the trade mark ceasing to function as a symbol of quality and may be deemed to be abandoned16 thus, possibly depriving a proprietor of his rights in and to the trade mark.

Developing a trade mark is an expensive and time-consuming process and a proprietor must be extremely weary of losing out on his reputation and goodwill on account of not maintaining the necessary control over a licensee as required by law.

Therefore, it is extremely important to maintain and exercise proper quality control and supervision over a licensee so as to ensure that the proprietor’s rights in and to his trade mark are not diluted nor deemed to be abandoned.

1 J. Gilson,Trademark Protection and Practice,Section6-3 (1984).
2 Scandecor Development AB v. Scandecor Marketing et al [2002] F.S.R. 122.
3 Law of Trade Marks by L. B. Sebastian (Fifth Edition), J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition.
4 Trade Mark Licensing (Second Edition) by Neil J. Wilkof and Daniel Burkitt.
S Trademark and Unfair Competition Law by J. C. Ginsburg, J. Litman and M.L. Kevlin.
6 Law of Trade Marks by L. B. Sebastian (Fifth Edition).
7 Section 2(1)(zb) of the Trade Marks Act, 1999.
8 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 3:8.
9 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition. § 3:9, 3:10, 18:42.
10 K. R. Jadayappa Mudaliar v. K. B. Venkatachalam (1990) 105 Mad. LW 720, also quoted in Fatima Tile Works v. Sudarshan Trading Co., AIR 1992 Mad. 12
11 Gujarat Bottling Co. v. Coca Cola Company, AIR 1995 SC 2372.
12 Societe Comptoir de L’Industrie Cotonniere Etablissements
Boussac v. Alexander’s Dep’t Stores, Inc. 299 F.2d 33.
13 Barcamerica Intern. USA Trust v. Tyfield Importers Inc. 289 F.3d589.
14. Section50 of the Trade Marks Act, 1999
15. [2002]F.S.R.122
16 Poole v. Kit Mfg. Co., 184 lJ.S.P.Q. 302; Stanfield v. Osborne Industries, Inc., 52 F.3d 867.

Nirav Shah

Trade mark Law: ‘Parody’

IPR LAWS

An interesting debate arises in light of the recent
controversy between the Tata Group and Greenpeace, India (‘Greenpeace’). The
facts leading to the controversy and a recent judgment of the Delhi High Court
were that Greenpeace, a non-profit organisation that seeks to promote
environmental causes, had started a campaign protesting the building of a port
in the Bhadruk District in Orissa. It was Greenpeace’s view, that the building
of the port would dishouse the Olive Ridley turtles found in the area as also
disturb the marine life in the vicinity. The Tata Group resisted the said
campaigning and asserted that they had already secured all necessary approvals
and permissions. Hence, in order to raise awareness about the plight of the
turtles, Greenpeace India, inter alia, hosted a game on their website known as
‘Turtle v. Tata¹.’ The game is a pac man style game wherein
the role of the pac man is portrayed by a turtle and the demons are the symbol
of Tata chasing the turtle. It was in this context that Tata filed a claim in
the Delhi High Court on two grounds, firstly that the acts of Greenpeace were
defamatory in nature; and secondly, that by using the name Tata and the symbol
of Tata, Greenpeace had infringed the registered trade marks of Tata.

For the purposes of the present article, we are concerned
only with the second aspect of the claim, i.e., trade mark infringement and
whether such ‘parodic’ use of a trade mark would amount to infringement thereof.
The issue is a delicate one since it involves the balancing of two competing
private rights as also two competing public interests. The private rights are
obvious, one being the right to free speech and the other being the right in
property of the trade mark owner. The public interests, though may not be
evident immediately, do exist. The right to free speech is a fundamental right
guaranteed to every citizen under Article 19 of the Constitution of India, and
it is imperative in public interest that this fundamental right is not
restricted except to the limited extent as envisaged under the said Article
itself. On the other hand trade mark law apart from protecting the rights of an
individual in his property, does a more important function that of preventing
public confusion. Trade mark law seeks to protect the general public from the
confusion that may arise in case identical and/or deceptively similar marks are
used by different traders upon their goods in the market. Such confusion, if not
protected against, could lead to disastrous consequences — for example, where a
medicine for lowering blood pressure and a medicine for increasing blood
pressure are sold under identical and/or deceptively similar trade marks. Public
confusion in such a case could even be fatal.

It is in light of the above, that I propose to examine the
law relating to use of trade marks in parodies and to what extent can a
citizen’s right to free speech be extended, can it be allowed even if it
violates someone else’s property rights or must it be curtailed as being a
reasonable restriction and/or to put it differently does a trade mark
registration prevent all further usage of the trade mark by any other person.

In order to examine this issue, reference may be made to
Article 19 of the Constitution of India and section 29 of the Trade marks Act,
1999, each of which, inter alia, provide as under:

Constitution :

“19. Protection of certain rights regarding freedom of
speech, etc.

(1) All citizens shall have the right

(a) to freedom of speech and expression;

(b) – (g) xxxxxx

(2) Nothing in sub-clause (a) of clause (1) shall affect
the operation of any existing law, or prevent the State from making any law,
in-so-far as such law imposes reasonable restrictions on the exercise of the
right conferred by the said sub-clause in the interests of the sovereignty
and integrity of India, the security of the State, friendly relations with
foreign States, public order, decency or morality or in relation to contempt
of court, defamation or incitement to an offence.”

Trade marks Act, 1999:

“29. Infringement of registered trade marks. —

(1) 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 is identical with, or deceptively
similar to, the trade mark in relation to goods or services in respect of
which the trade mark is registered, and in such manner as to render the use
of the mark likely to be taken as being used as a trade mark.

(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.”

A bare reading of section 29 would show that use of a
registered trade mark as a trade mark by any person other than the registered
proprietor of a trade mark without the consent of the owner would amount to an
infringement thereof. Hence, in the instant case, it was argued by the Tata
Group that use of their registered trade mark and symbol by Greenpeace was in
violation of their rights and amounted to infringement of registered trade
marks. Greenpeace took the defence that the use of the trade marks was merely in
a parodic sense and not for any other purpose. Greenpeace urged that the use of
a trade mark in a parody would fall within section 29(4) of the Trade marks Act,
1999 and hence, would not amount to an infringement. Greenpeace contended that
their use was not ‘without due cause’ and hence, they had not infringed the
registered trade marks.

At this juncture, before alluding to the ratio decidendi of
the Delhi High Court in the above matter, I would like to, as a background,
explain what is a parody and draw attention to a few judgments of the American
Courts, wherein the issue of use of a trade mark in a parodic sense has been
considered and dealt with.

It may be appreciated that in the USA the right to freedom of speech guaranteed under the First Amendment to the American Constitution is absolute as compared to the conditional right to freedom of speech granted under the Indian Constitution2. Hence, the considerations weighing with the American Courts vis-à-vis the freedom of speech would not be entirely analogous.

A parody as defined by Wikipedia is “is a work created to mock, comment on, or make fun at an original work, its subject, author, style, or some other target, by means of humorous, satiric or ironic imitation.3”

The Second Circuit has in the case of Cliff Notes Inc. v. Bantam Doubleday Dell Publishing Group Inc.4 succinctly explained the purpose of a parody as being “A parody must convey two simultaneous and contradictory messages: that it is the original but also that it is not the original and is instead a parody.” The Second Circuit also pointed out that if a parody which only performed the first function, it would be subject to trade mark law since it could lead to consumer confusion. The Court held that the principal issue that ought to be decided in such a case was how to strike a balance between the two competing considerations of allowing artistic expression and preventing consumer confusion.

Music International5, the Ninth Circuit dealt with a claim by Mattel for the use of its trade mark ‘Barbie’ by the music group Aqua in their song entitled ‘Barbie Girl.’ The lyrics of the song made references to the trade mark ‘Barbie’ and it was this use of the trade mark ‘Barbie’ which was considered, inter alia, an infringement by Mattel. The Ninth Circuit, after considering the manner of use and the nature of the use of the trade mark in the song, held that there was no infringement. The Ninth Circuit made several interesting observations with respect to the conflict between the rights granted under the First Amendment (right to free speech) and to the rights of a trade mark owner. The Ninth Circuit observed, inter alia, as under:

“The First Amendment may offer little protection for a competitor who labels its commercial goods with a confusingly similar mark, but trade mark rights do not entitle the owner to quash an unauthorised use of the mark by another who is communicating ideas or expressing points of view. Were we to ignore the expressive value that some marks assume, trade mark rights would grow to encroach upon the zone protected by the First Amendment. When unauthorised use of another’s mark is part of a communicative message and not a source identifier, the First Amendment is implicated in opposition to the trade mark right. Simply put, the trade mark owner does not have the right to control public discourse whenever the public imbues his mark with a meaning beyond its source identifying function. It is the source identifying function which trade mark law protects, and nothing more.”

The Ninth Circuit, in order to adjudicate the dis-pute, applied the test as to whether the use of the trade mark was misleading to the source or content of the work or did it have artistic relevance to the underlying work. The Court held that the use of ‘Barbie’ by the defendants was not misleading as to the source and hence, no case for infringement was made out.

One more interesting judgment of the American Courts in this regard is the case of Mutual of Omaha Insurance Co. v. Novak6 wherein the alleged infringing acts were the use by Novak of the trade marks of Mutual of Omaha Insurance Co. on T-shirts. The registered trade mark of the Mutual of Omaha Co. was ‘Mutual of Omaha’, used in respect of its insurance services. Novak started using a similar design with the trade mark ‘Mutant of Omaha’ and a sign below that which read as ‘Nuclear Holocaust Insurance.’ In this case, the defence of parodic use was negated by the majority on the grounds that the protection af-forded by the First Amendment does not give a licence to infringe someone else’s property rights; and that since there were several other avenues of communication available to Novak, such as an editorial parody in a book, magazine or film, such use in violation of the rights of Mutual of Omaha Insurance Co. must be injuncted. Justice Heaney, however, dissented and considered that the majority judgment had failed to recognise and protect the rights of Novak under the First Amendment.

In India, on the other hand, there have not been too many judicial pronouncements on parody as a defence in a trade mark infringement action. One of the few earlier judgments is in the case of Pepsico Inc v. Hindustan Coca Cola Ltd.7, wherein the Delhi High Court recognised in passing that a parody would not be an infringement and held that, “Similarly, use of the phrase in the commer-cial advertisement “Yeh Dil Mange No More” can at best be mocking or parodying in the context it is used, but does not amount to infringement of trade mark of the appellant.”

However, now Justice Ravindra Bhat has in his judgment in Tata Sons Ltd. v. Greenpeace 8 dealt with and discussed the subject of parodies in some detail. Justice Bhat based his judgment primarily on the judgment of the South African Constitutional Court in case of Laugh It off Promotions CC v. Freedom of Expression Institute9, which was a case where the Defendant had sought to market T-shirts bearing parodied images of trade marks of several corporate giants. This was objected to by South African Breweries, one of the corporate giants whose trade marks had been parodied upon on the defendant’s T-shirts. It was in these facts that the Court was pleased to hold as under:

“76. Parody is inherently paradoxical. Good parody is both original and parasitic, simultaneously creative and derivative. The relationship between the trade mark and the parody is that if the parody does not take enough from the original trade mark, the audience will not be able to recognise the trade mark and therefore, not be able to understand the humour. Conversely, if the parody takes too much it could be considered infringing based upon the fact that there is too much theft and too little originality, regardless of how funny the parody is.

Parody is appropriation and imitation, but of a kind involving a deliberate dislocation. Above all, parody presumes the authority and currency of the object work or form. It keeps the image of the original in the eye of the beholder and relies on the ability of the audience to recognise, with whatever degree of precision, the parodied work or text, and to interpret or ‘decode’ the allusion; in this sense the audience shares in a variety of ways the creation of the parody with the parodist. Unlike the plagiarist whose intention is to deceive, the parodist relies on the audience’s awareness of the target work or genre; in turn, the complicity of the audience is a sine qua non of its enjoyment.

The question to be asked is whether, looking at the facts as a whole, and analysing them in their specific context, an independent observer who is sensitive to both the free speech values of the Constitution and the property protection objectives of trade mark law, would say that the harm done by the parody to the property interests of the trade mark owner outweighs the free speech interests involved. The balancing of interests must be based on the evidence on record, supplemented by such knowledge of how the world works as every judge may be presumed to have. Furthermore, although the parody will be evaluated in the austere atmosphere of the Court, the text concerned (whether visual or verbal or both) should be analysed in terms of its significance and impact it had (or was likely to have), in the actual setting in which it was communicated.

It seems to me that what is in issue is not the limitation of a right, but the balancing of competing rights. The present case does not require us to make any determinations on that matter. But it would appear once all the relevant facts are established, it should not make any difference in principle whether the case is seen as a property rights limitation on free speech, or a free speech limitation on property rights. At the end of the day this will be an area where nuanced and proportionate balancing in a context specific and fact-sensitive character will be decisive, and not formal classification based on bright lines.

In sum, while a defendant’s use of a parody as a mark does not support a ‘fair se’ defence, it may be considered in determining whether the Plaintiff-owner of a famous mark has proved its claim that the defendant’s use of a parody mark is likely to impair the distinctiveness of the famous mark.”

It was based on the above reasoning and in light of the facts that Justice Bhat was pleased to hold that Greenpeace’s actions did not amount to an infringement and held, inter alia, as under:

“42. The above analysis would show that the use of a trade mark, as the object of a critical comment, or even attack, does not necessarily result in infringement. Sometimes the same mark may be used, as in Esso; sometimes it may be a parody (like in Laugh it Off and Louis Vuitton). If the user’s intention is to focus on some activity of the trade mark owners, and is ‘denominative’, drawing attention of the reader or viewer to the activity, such use can prima facie constitute ‘due cause’ u/s.29(4), which would disentitle the Plaintiff to a temporary injunction, as in this case. The use of TATA, and the `T’ device or logo, is clearly denominative. Similarly, describing the Tatas as having demonic attributes is hyperbolic and parodic. Through the medium of the game, the defendants seek to convey their concern and criticism of the project and its perceived impact on the turtles habitat. The Court cannot annoint itself as a literary critic, to judge the efficacy of use of such medium, nor can it don the robes of a censor. It merely patrols the boundaries of free speech, and in exceptional cases, issues injunctions by applying Bonnard principle.”

I firmly believe that Justice Bhat’s judgment is a step forward in the right direction. However, each case would have to be judged on its own merits. A perusal of the above judgments reveals as to how Courts have so far sought to balance the two competing interests in cases of parodies involving registered trade marks. In my opinion, this is a very sensitive matter and the line of distinction very fine between the two competing public interests. Courts will need to exercise their judicial discretion in every case to determine whether the use of a trade mark in a parody is promoting public interest in terms of establishing free speech or would it be reasonable to restrict the same since it is in fact harming public interest by causing public confusion as also violating the rights of an individual trade mark owner.

One cannot overemphasise the importance and relevance of the present issue, since it involves a balancing act between two competing public interests and not just private interests. Admittedly, the case when filed by a trade mark owner would be to protect his own private interest in property but the underlying fact is that Courts will be called upon to consider and/or must consider the public interests involved. The freedom of speech as against the disastrous consequences which could arise out of public confusion need to be assessed and balanced in each case. Hence, it is essential that an effective rule and/or law is developed to guide the Courts in such matters. An official recognition to parodies would also be beneficial. The Copyright Act, 1957 does protect work published for the purpose of fair comment and criticism. I think it would be advisable to introduce a suitably moulded provision in the Trade marks Act, 1999 as well.

Nirav Shah

Infringement vs. Passing – off

IPR Laws

This month’s article seeks to explain a fundamental aspect of
the law on trademarks, the distinction between an action for infringement of a
registered trademark and an action for passing off. Whilst the former is a
statutory wrong the latter is a tort under common law. This distinction is
crucial for any trademark owner to strategise the maintenance of their trademark
portfolios.

A trademark is a mark which connects the goods and/or
services of a person with that person in the course of trade and thereby
distinguishes it from the goods and/or services of others. The Trade Marks Act,
1999 (‘the Act’) more specifically defines a trademark, inter alia, as a mark
capable of being represented graphically and which is capable of distinguishing
the goods or services of one person from those of others.¹Therefore,
a mark in order to be a trademark need not necessarily be registered. A
trademark may also either be used or proposed to be used. These factors as to
whether a trademark is used and/or registered are factors relevant for
determining whether an action for infringement of trademark and/or an action for
passing off may be instituted.

I shall initially explain what is meant by infringement of a
registered trademark and passing off, respectively, and then proceed to deal
with the broad distinctions.

Infringement of Registered Trademark :

Chapter IV of the Act deals with the effect of registration
of a trademark. The Act specifically provides that no proceedings for
infringement of an unregistered trademark may be instituted thereby clarifying
that an action for infringement can only be taken in respect of a registered
trademark. In fact, a right granted on registration is the right to take
recourse to infringement proceedings.² The Act also clarifies that an
action for passing off will not be affected by the Act.³

S. 29 of the Act deals with and identifies the acts that
would constitute infringement of a registered trademark. The Section seeks to
protect a registered trademark and/or a mark deceptively similar thereto from
being exploited and/or used by an unauthorised person so as to defeat the rights
of the registered proprietor of the trademark of being entitled to exclusively
use the registered trademark. The scope and ambit of acts constituting
infringement has been substantially broadened under the present Act by bringing
in concepts like dilution of trademark, erosion of distinctive character of the
trademark, parallel importation and damage to reputation, etc.

The statutory law relating to infringement of trade-marks is
based on the same fundamental idea as the law relating to passing off. But it
differs from that law in two particulars, namely, (1) it is concerned only with
one method of passing off, namely, the use of a trademark and (2) the statutory
protection is absolute in the sense that once a mark is shown to offend, the
user of it cannot escape by showing that by using something outside the actual
mark itself he has distinguished the goods from those of the registered
proprietor.⁴

In an infringement action, the plaintiff is, ordinarily, only
required to prove that the defendant is using the registered trademark and/or a
mark deceptively similar thereto in respect of the same goods or services cause
that would be enough to show a violation of the rights conferred on the
registered proprietor. Infringement consists in using the mark per se as a
trademark and therefore, any other distinguishing factors that may be employed
by a defendant may not be relevant in an infringement proceeding.

Any person trespassing on the rights conferred by
registration of a trademark infringes the registered trademark. The rights
conferred by registration in a particular case must be determined in the context
of any restrictive conditions or limitations entered on the Register of Trade
Marks at the time of registration of the mark.

Infringement proceedings, thus, enable a registered
proprietor to prevent any unauthorised person from using his trademark and/or
mark deceptively similar thereto in respect of similar goods or services or as
contemplated u/s.29 of the Act.

Passing off :

On the other hand, the object of the law of passing off is to
protect some form of property — usually the goodwill of the plaintiff in his
business or his goods or his services or in the work which he produces. The
trademark represents the reputation and goodwill of a business and/or the goods
and/or the services. For example, the goods sold by ‘Nike’ are considered to be
of superior quality and have an immense reputation in the market. The goods sold
under the trademark ‘Nike’ carry immense value on the basis of the fact that
they bear the ‘Nike’ trademark. If the same goods were sold without the said
trademark thereon, they would not be as valuable.

Passing off is a form of tort of deceit and/or
misrepresentation. To put it in a nutshell, passing off is a tort whereby one
person tries to pass off his goods and/or services as and for the goods and/or
services of another. Passing off in effect is also a form of unfair competition.
It is a common law remedy and has been built entirely on the basis of case law.

In Halsbury’s Laws of England, 4th Edn., Volume 48, para 144
at page 98, the essentials of the cause of action for passing off, as restated
by the House of Lords in Erven Warnink B. V. v. J. Townend & Sons, 1980 R.P.C.
31, are set out as follows :

“(1) a misrepresentation

(2) made by a trader in the course of trade

(3) to prospective customers of his or ultimate consumers
of goods or services supplied by him

(4) which is calculated to injure the business or goodwill
of another trader, in the sense that this is a reasonably foreseeable
consequence, and

(5) which causes actual damage to a business or goodwill of
the trader by whom the action is brought or, in a quia timet action, will
probably do so.”

The aforequoted dictum of Lord Diplock is the locus
classicus on the subject and succinctly explains what is meant by the tort
of passing off.

Therefore, it may be noted that in order to enable the owner
of a trademark to sue for passing off, he would be required to show in the first
instance that the trademark is associated by members of the trade and public
solely and exclusively with the services rendered and/or goods sold by him and
that some other person by using an identical and/or deceptively similar mark in
respect of similar services and/or goods is trying to pass off his goods and/or
services as and for the goods and/or services of the owner. Confusion and
deception in the course of trade would be essential to an action in passing off.

It is common understanding that an action for passing off cannot be instituted in respect of an unused trademark, however the same is incorrect. For in a given situation passing off may even be instituted in respect of a trademark which has not been used in the market, but which has acquired reputation and goodwill on the basis of other factors such as publicity, advertisements, etc. and has therefore, come to be associated solely with the owner of the trademark.5

Distinction :

The distinction between an infringement action and a passing off action is important. As explained above, both operate in different spheres. Hence, to illustrate there could even be a situation where a registered proprietor (Plaintiff) files a suit for infringement and the defendant files a suit for passing off against the same plaintiff. This would happen in a case the defendant has a prior user of the trademark but a subsequent registration.

The issues involved in an action for infringement and an action for passing off are different and distinct. In an action for infringement the basic issue would generally be whether the registered trademark and the infringing mark are identical and/or deceptively similar and whether or not they are being used in respect of similar goods and/or services. However, in an action for passing off, in the first instance the plaintiff would have to show that the said trademark is associated solely and exclusively with his services and/or goods and that use by the defendant of such mark would cause confusion and/or deception in the course of trade and thereby people would end up buying and/or procuring the goods and/or services of the defendant thinking they were of the plaintiff. Such acts would cause wrongful loss and harm to the plaintiff.

The Supreme Court has succinctly highlighted major differences between the two remedies and the approaches involved in an action for infringement and an action for passing of in the landmark judgment of Ruston Hornsby v. Zamindara Engineering, AIR 1970 SC 1649, wherein it has laid down, inter alia, as under :

“It very often happens that although the defendant is not using the trademark of the plaintiff, the get-up of the defendant’s goods may be so much like the plaintiff’s that a clear case of passing off would be proved. It is on the contrary conceivable that although the defendant may be using the plaintiff’s mark, the get-up of the defendant’s goods may be so different from the get-up of the plaintiffs goods and the prices also may be so different that there would be no probability of deception of the public. Nevertheless, in an action on the trademark, that is to say, in an infringement action, an injunction would issue as soon as it is proved that the defendant is improperly using the plaintiff’s mark.

The action for infringement is a statutory right. . . . .
On the other hand the gist of a passing off action is that A is not entitled to represent his goods as the goods of B, but it is not necessary for B to prove that A did this knowingly or with any intent to deceive. It is enough that the get-up of B’s goods has become distinctive of them and that there is a probability of confusion between them and the goods of A. No case of actual deception, nor any actual damage need be proved.”

Another important factor of distinction is the fact that under the Act, a registered proprietor is granted an additional right to institute an action for infringement of trademark where the plaintiff’s office is situate. This provision was introduced to enable the registered proprietors take appropriate proceedings against infringers without having to follow them to every corner of the country. On the other hand, however, passing off being a common law remedy, the jurisdiction of a Court to take cognizance of the same would be in accordance with the normal rules of jurisdiction as laid down in the Code of Civil Procedure, 1908 and/or the relevant Letters Patent i.e., either where the defendant resides or carries on business or where the cause of action has arisen, etc.

To illustrate the above points of distinction, take a situation where a trader in pens is the registered proprietor of a trademark ‘KODAK’ (word per se) and has been using the same for the last decade on a yellow and red background in respect of his pens. The defendant is using the trademark ‘TODAT’ in respect of his pens on a white and green background. In such a case for the purposes of an infringement action the Court would only consider whether the trademarks KODAK and TODAT are identical and/ or deceptively similar, since the goods are identical. On the other hand, for the purposes of an action of passing off, the Court would have to consider the entirety of the package including the difference in colour schemes, nature of consumers, packaging, etc. and consider whether on an appraisal of the entire evidence it can be proved that the consumers would be confused and/or deceived into buying the pens of the defendant on the belief that they were somehow connected with the plaintiffs.

In the aforesaid illustration let us assume that the pens are sold by both traders on a red and yellow background but the trademarks involved are the registered trademark KODAK (word per se) and the unregistered trademark PILOT. In such a case even though the trademarks per se are different, an action in passing off may still lie if by colour scheme, packaging, trademark being written in small letters, etc. the consumer and general public would be confused and/or deceived into buying the defendants pens on the belief that they emanate from the plaintiff.

A perusal of the above would evince the fact that the two wrongs are different. Therefore, it is essential for owners of trademarks to understand that even if their trademark is not registered, they may still maintain an action in passing off. In fact, in a given case a trader who may not have used the trademark in the Indian market, but whose trademark has acquired a transborder reputation in India may maintain an action in passing off. A situation may also arise where even if a trademark is registered, use of the same may be restrained by a prior user of the trademark.

Therefore, there can be no general answer as to which proceeding is better and/or preferred and the course of action and must be determined on a case-by-case basis.

Nirav Shah

Copyright Law — The test of originality

“Thou shall not steal”

— The Ten Commandments

The Eighth Commandment of Christianity but the first of the copyright law. It is believed that the moral basis for copyright law derives its source from this Eighth Commandment1.

Copyright law deals with providing rights in respect of certain works which it recognises as being the intellectual creations of their authors and seeks to protect the rights of the authors and/or the owners in respect of such works. The reason why there is a need for the law of copyright has been succinctly explained by Chinappa Reddy J. in Gramophone Co. v. Birender Bahadur Pandey2, wherein he stated that :

“An artistic, literary or musical work is the brainchild of the author, the fruit of his labour and so, considered to be his property. So highly is it prized by all civilised nations that it is thought worthy of protection by national laws and international conventions.”

Copyright is a statutory right and exists only in the works which qualify for protection under the Copyright Act, 1957 (hereinafter referred to as ‘the Act’). Copyright grants to the owner and/or the author of a work a bundle of rights in respect of the work as are enumerated in S. 14 of the Act.

Relevant provisions of the Act :

At the outset, it would be instructive to note what is meant by the term ‘work.’ As defined in S. 2(y) of the Act, a work means either a literary, dramatic, musical or artistic work or a cinematograph film or a sound recording. Thus, these are the works in respect of which copyright may subsist. It may be noted that each of these kinds of works are further defined and explained in the Interpretation Clause of the Act.

However, not all literary or artistic works can claim to have copyright, but only those which comply with the requirement of S. 13 of the Act.

S. 13 of the Act, inter alia, provides as under :

“Works in which copyright subsist.

(1) Subject to the provisions of this Section and other provisions of this Act, copyright shall subsist throughout India in the following classes of works, that is to say —

(a) original literary, dramatic, musical and artistic works;

(b) Cinematograph films; and

(c) Sound recording.”

In light of the above, it may be appreciated that a literary, dramatic, musical or artistic work to qualify for copyright protection must be original. Originality remains the sine qua non of copyright; accordingly, copyright protection may extend only to those components of a work that are original to the author3.

It is in this scenario, that the question arises as to what is the standard of originality required to obtain copyright protection. This has been a vexed question over the years to which the Courts have applied different standards.

At the outset, it may be appreciated that the said question has been recently considered by the Apex Court in Eastern Book Company v. D. B. Modak4 (hereinafter referred to as ‘the Eastern Book case’) wherein the Apex Court was dealing with the issue of copyright in the text of the copy-edited judgments of the Supreme Court as reported in the law report ‘Supreme Court Cases’ and whether the said copy-edited judgments were original literary works entitled to copyright protection. The Apex Court classified the copy-edited judgments as a form of secondary or derivative works, i.e., those literary works which are based on existing subject matter.

It is in this context, that the tests to judge originality are being outlined, as have been applied over the years and as are identified in the Eastern Book Case and what is the test to be applied to judge originality now, has been laid down by the Supreme Court.

Sweat of the brow :

The first test identified before the Supreme Court with respect to identifying which works are capable of copyright protection was the ‘sweat of the brow’ or the ‘industriousness approach’ test. A plethora of judgments were cited in support of this theory by the petitioners, i.e., the Eastern Book Company to support the proposition that copyright does subsist in the copy-edited text of judgments of the Supreme Court. This approach is based on the proposition that a work that has originated from the author, is more than a mere copy of the original work, would be sufficient to generate copyright5. The underlying notion being to reward the hard work that goes into the creation of the work6.

The United States Supreme Court in the Feist Case7 observed that the classic formulation of the sweat of the brow theory is to be found in the following passage from Jeweler’s Circular Publishing Co.

“The right to copyright a book upon which one has expended labour in its preparation does not depend upon whether the materials which he has collected consist or not of matters which are publici juris, or whether such materials show literary skill or originality, either in thought or in language, or anything more than industrious collection.”

Thus, all that was required under this approach was to examine whether any skill, labour and capital had been expended in the creation of the work and that it was not a copy of another work. Once these two criteria were satisfied the work would be entitled to copyright protection.

Creativity standard/non-obviousness:

The other test identified by the Apex Court in the Eastern Book case is the creativity standard or the non-obviousness standard whereby a Court would be called upon to inquire whether the work possesses a certain degree of creativity and non-obviousness and is therefore novel so as to be entitled to copyright protection.8 This approach, however, seems to raise the bar of originality to an extremely high level, which is more befitting of patent law rather than copyright law.

Skill and judgment test:

In light of the said divergent approaches, the Supreme Court in the Eastern Book 9 case, after analysing, inter alia, the United States Supreme Court’s judgment in Feist Publications Inc. v. Rural Telephone Seroices10 and the Canadian Supreme Court’s judgment in CCH Canadian Ltd. v. Law Society of Upper Canada11 has propounded a middle path, consistent with the view of the Canadian Supreme Court, to judging originality which is not as low as the sweat of the brow standard, nor as high as the creativity standard. The Apex Court held that,

“Thus, the Canadian Supreme Court is of the view that to claim copyright in a compilation, the author must produce a material with exercise of his skill and judgment which may not be creativity in the sense that it is not novel or non-obvious, but at the sametime it is not the product of merely labour and capital.12”

Thus, according to the Supreme Court the test for judging originality would be to enquire whether the work has been created by skill and judgment and has the flavour of the minimum requirement of creativity. The work should not be produced merely by labour and capital but by skill and judgment and must have a minimal degree of creativity. Applying this test the Supreme Court in the instant case, held that the copy-edited judgments did not touch the standard of creativity required for copyright.”

Conclusion:
There was a need to reconsider the tests to be applied since, by applying the sweat of the brow test, Courts were recognising copyright in almost every work. Therefore, a slightly higher standard was required, for in essence, copyright being a part of intellectual property laws seeks to protect the intellectual creations and inputs and not every input. Hence, to that extent replacing of the words ‘skill, labour and capital’ with ‘skill and judgment’ seems to denote a paradigm shift from mere physical or mechanical exercise to a more mental exercise.

However, the test raises several new questions such as what is the minimum level of creativity that is now to be found to show that a work is copyrightable? what exactly is meant by the words skill and judgment, etc. ? The Courts will have to evolve further sub-rules or sub-tests to fortify and clarify the ‘skill and judgment’ test laid down by the Apex Court.

To highlight the Apex Court’s own interpretation of this test, it may be noted that the Apex Court held that the copy-edited judgments did not meet the standard of creativity and hence, were not capable of copyright creation. However, the Apex Court also held that the inputs of segregating paragraphs and numbering them as also indicating which judges have concurred and/or dissented were copy-rightable as these changes required the input of skill and judgment and they had a flavour of a minimum amount of creativity.

However, the Apex Court may want to reconsider some of its findings such as, for example, its finding that insertion of details as to consenting and dissenting judges has a minimum amount of creativity and that copyright would subsist in the same. For in such a case, the creativity could at the most be said to lie in the idea to identify and alter the text of the judgment to show where a judge has dissented or concurred, whereas the expression thereof is in terms of phrases commonly used such as ‘concurring’ or ‘partly concurring’, etc. It is well-settled law as has been laid down since 1978, by the Apex Court in R. G. Anand v. Delux Films14 that copyright only exists in the expression and not in the idea. Therefore, my view would be that the phrases used i.e., the expression of the idea are standard phrases used commonly, which subject to other factors such as whether a word or two words can be a literary work in itself or even qualify as a derivative work, cannot be said to possess any level of creativity and cannot be copyrighted by anyone person.

The phrases ‘concurring’ and/or ‘partly concuring’, etc. would not, despite the possibility of a high level of skill and judgment in deciding where to insert these phrases, meet the test of the minimum amount of creativity, as in judging the originality of a work what must be looked at is the expression and not the idea.

Thus, to conclude, I would submit that the test as laid down is a positive step forward and was required to raise the standard beyond the mere sweat of the brow test. However, it is essential that Courts interpret it in the true sense by applying all the factors involved as have been identified by the Canadian Supreme Court and not in the manner as interpreted by our Apex Court primarily identifying only skill and judgment. In order to enable to the new approach to work effectively, the creases will need to be ironed out.

1 Lord Atkinson in Macmillan v. Cooper (1924) 40 TLR 186
2 AIR 1984 SC 667
3 Feist Publications Inc. v. Rural Telephone Service, 499 V.S. 340
4 2008 (36) PTC 1
5 Eastern Book Company v. D. B. Modak, 2008 (36) PTC 1
6 Feist Publications Inc. v. Rural Telephone Service, 499 U.S. 340
7 499 U.S. 340
8 Eastern Book Company v. D. B. Modak, 2008 (36) PTC 1
9 2008 (36) PTC 1
10 499 U.S. 340
11 .2004 (1) SCR 339 (Canada)
12 Eastern Book Company v. D. B. Modak, 2008 (36) PTC 1
13 Eastern Book Company v. D. B. Modak, 2008 (36) PTC 1
14 AIR 1978 se 1613

Nirav Shah

Copyright – The Need for Registration?

To be registered or not to be registered, that is the question1.

The Copyright Act, 1957 (hereinafter referred to as “the Act”) deals with the law relating to copyright and the works in which copyright subsists, the rights of a copyright owner, the remedies of a copyright owner in case of infringement, registration of copyright etc. Now, whilst in the case of trade mark law and the law relating to patents, the respective statutes are explicitly clear that infringement can only be of a registered trade mark and of a patent granted under the Patents Act, 1970 respectively2, the Act does not so clarify in express terms. This aspect of registration of copyright and whether or not the same is mandatory in order to avail the benefits of copyright and the remedies provided under the Act has been the subject matter of several judgments, some of which will be discussed in this article. This question has now come to the fore in the light of a recent judgment3 of the Bombay High Court, which has held that registration of copyright is necessary to avail of the remedies provided under the Act.

Hence, in order to address this question, I would like to draw attention to the broad scheme of the Act and the relevant provisions thereof, followed by some judgments on the issue and thereafter, my thoughts on the law as prevailing currently and on the said recent judgment of the Bombay High Court.

Statutory provisions

The Act was enacted to amend and consolidate the law relating to copyright. The Act comprises of 79 sections spread subjectwise over 15 Chapters. For the purposes of addressing the query at hand, it would be necessary to consider the provisions of Chapter III, Chapter X and Chapter XI of the Act. Chapter III of the Act deals with works in which copyright subsists and nature of rights therein. In this regard, reference may be had in particular to section 13 of the Act which provides for, inter alia, works in which works copyright subsists as also in which works copyright does not subsist. Section 14 provides that copyright means the exclusive rights stated therein whilst section 16 provides, inter alia, that no person shall be entitled to copyright or any similar right in any work otherwise than and in accordance with the Act.

The subject of registration of copyright is dealt with in Chapter X of the Act. Section 44 provides that there shall be kept at the Copyright Office a register to be called the Register of Copyrights in which may be entered the names or titles of works and such other particulars as may be prescribed. Section 48 provides that the Register of Copyrights shall be prima facie evidence of the particulars entered therein. Section 50A provides that every entry made in the Register of Copyrights shall be published.

It may also be relevant to note that Chapter XI deals with infringement of copyright and section 51 provides, inter alia, that doing of any act by any person, the exclusive right to do which is conferred by the Act upon the owner, without the licence of the owner would be an infringement of copyright. Copyright is also infringed by allowing for profit any place to be utilised for communication of a work (which is infringing) to the public. Copyright is also infringed when a person offers for sale etc. an infringing copy of the work.

Thus, on a plain reading of the statute, it would be evident that u/s. 13 of the Act, copyright subsists in certain works. Section 13 of the Act makes no qualification as to the need for registration for a copyright to subsist. Similarly, section 51 of the Act does not talk of infringement of a registered copyright but only lays down that if any person without licence does any of the acts which only the owner of the copyright is granted the exclusive right to do, then such person would infringe the copyright.

At this juncture, it may also be relevant to point out that under the Berne Convention for the Protection of Literary and Artistic Works, to which India is a signatory, a provision is made that enjoyment and the exercise of the rights recognised therein shall not be subject to any formality4. This clause was one of the foremost reasons why the United States which has traditionally required registration of copyright did not become a signatory to the said Berne Convention for a very long time. It may be noted that even today, several countries continue to have certain formalities imposed within their legal framework but in such a manner so as to avoid falling foul of their treaty obligations.

Case law

In the light of the aforesaid statutory background, attention is invited to two contradictory judgments of the Bombay High Court on this issue. Both judgments have been passed by bench comprising of a single judge.

The first judgment is in the case of Asian Paints vs. Jaikishan Paints and Allied Products reported in 2002 (4) MhLJ 536 wherein His Lordship the Honourable Mr. Justice Vazifdar has inter alia, held as under,

“Registration under the Copyright Act is optional and not compulsory. Registration is not necessary to claim a copyright. Registration under the Copyright Act merely raises a prima-facie presumption in respect of the particulars entered in the Register of Copyright. The presumption is however not conclusive. Copyright subsists as soon as the work is created and given a material form even if it is not registered (See Buroughs (I) Ltd. vs. Uni Soni Ltd. 1997 (3) Mh.L.J. 914). Thus even if the plaintiffs work was not registered, the plaintiff having established that it had created the same prior to the defendant, mere registration by the defendant of its work cannot defeat the plaintiff’s claim.”

En suite, attention is invited to a recent judgment of His Lordship the Honourable Mr. Justice A. B. Chaudhary in the case of Dhiraj Dharamdas Dewani vs. M/s Sonal Info Systems Pvt. Ltd. reported in 2012 (3) MhLJ 888, wherein it has, inter alia, been held as under,

“Perusal of section 51 clearly shows that it shall be deemed that there shall be infringement of the copyright when any person does anything, the exclusive right to do is conferred upon the owner of the copyright by the Copyright Act or any person makes sale of copies of such work by infringement of the copyright in the said work. It is thus clear from the reading of section 51 that infringement shall be deemed when exclusive right to do of the owner of the copyright is utilized by some other person viz. the infringer. Now unless such person (the infringer) knows that there is any particular owner of the copyright in India or that such owner of copyright has registered his work u/s. 44 of the Act before he did, attributing infringement by him or on his part intentionally or unintentionally, would be preposterous. Such a person who is infringing the copyright in a work must be deemed to have knowledge about the owner of the copyright and such knowledge cannot be attributed unless the provisions of Chapter 10 regarding registration of copyright, publication thereof etc. are complied with. Otherwise a person who is innocent can in that event be easily brought in the net of infringement under civil law or criminally, which can never be the intention of the legislature. Thus, reading of section 51 which defines infringement of right conferred by this Act, with section 45(1) and the word ‘may’ therein to my mind means; if owner of a copyright wants to invoke the provisions of this Act for enforcing civil and criminal nature of remedies before the special forum, namely the District Judge rather than a normal civil Court, he must have the registration….

25. Thus careful survey of the above provisions of the Copyright Act, 1957 to my mind clearly denotes that in the absence of registration u/s. 44 of the Copyright Act by the owner of the copyright it would be impossible to enforce the remedies under the provisions of the Copyright Act against the infringer for any infringement u/s. 51 of the Copyright Act. Thus, I answer point No. 1 in the affirmative.”

Thus, as on date, there are two contradictory views of co-ordinate benches of the Bombay High Court. It must, however, be appreciated that the second judgment has been passed in ignorance of the first in as much as Justice Chaudhary records in his judgment that there does not appear to be a Bombay judgment on the issue and hence, he is required to answer the same. Had the earlier judgment been brought to his notice, he would have been bound by the earlier judgment and even then if he had disagreed with the view, the right course would have been to refer the judgment to a larger bench of the High Court5.

It would also be relevant to note that since the earlier judgment in the case of Asian Paints6 was not brought to the notice of the later Bench, it could be urged that the judgment in Dhiraj Dewani’s7 case is per incuriam and hence, not a binding precedent. The Supreme Court has explained that “Incuria” literally means “carelessness” and that in practice per incuriam is taken to mean per ignoratium8.

Concluding remarks

Even though the Bombay High Court has recently held that registration of copyright is compulsory, it may be appreciated that the High Courts of Delhi9, Calcutta10, Madras11, Kerala12, Allahabad13 and Madhya Pradesh14 have respectively held that registration of copyright is not compulsory or mandatory. The Orissa High Court15 appears to be the only other Court which has taken the view that registration of copyright is compulsory.

Thus, it would be evident that the question of compulsory registration of copyright appears to be a vexed issue on which different High Courts seem to have taken different views over the years.

Without addressing the views already taken by the various High Courts, I would like to address the aspect of whether or not there ought to be a need for registration of copyright generally. It may be appreciated that copyright (taking the view of majority High Courts) is a form of intellectual property that subsists from the moment it is created and requires no registration or formal notice. This is different from the procedure either under trade mark law or law relating to patents or law relating to geographical indications etc. all of which require registration in order to enable their owner to claim statutory remedies.

The idea behind registration is the aspect of notice. Registration tends to amount to notice to the world at large, since if something is noted in a register, it would be possible for people to inspect the same and learn of the different rights being claimed by people. However, with respect to copyright law such a system appears to be optional (taking the view of majority High Courts). Thus, as has been high-lighted in the recent judgment in Dhiraj Dewani’s16 case, there could be instances where the alleged infringer may not even be aware of the rights of a person claiming copyright in his work.

A possible answer to this issue lies in the fact that, at a very basic level, copyright law seeks to prevent copying. The Act grants certain exclusive rights to an owner with respect to his work for example in case of a literary work, the owner has the exclusive right to reproduce the work, issue copies, perform the work etc. Hence, in order for infringement to be established, it would be necessary to show that the work being complained of is a colourable imitation or substantial reproduction of the original work. On the other hand, if there has been no copying even if there be similarities, there cannot be an infringement17. Thus, a person who seeks to copy a work must make due enquiry before doing so. Of course, even in such a situation where a person is bona fide interested in copying a work and is even willing to take a licence, if required, in the absence of the details being entered in an official register, it may not be possible for him to know whether the copyright protection for the work has expired or the details of the owner whom he may wish to approach for a licence etc.

This aspect of details of a work being unknown is even more acute in today’s modern era of cyberspace. Articles and other materials are regularly sourced over the internet but often these articles are not identified as to which is their country of origin or whether they are the subject matter of copyright or who is the owner thereof etc. Hence, in such cases even if a person were willing to bona fide approach a copyright owner for a licence, there could be no means for ascertaining the details of the owner. Some of the works available online may also have expired their term of copyright, but in the absence of a database such as a Register where all such details can be verified, it is almost impossible for people to even bona fide use such works. This results in the non-dissemination or non-communication of works, on account of lack of relevant material, which is against the public good.

Copyright law whilst protecting authors and owners must also recognise the rights of the general public to access such work and hence, must make provisions whereby adequate knowledge of the status of works and their owners is available to the general public, to enable them to access the work and/or obtain appropriate licences as may be necessary.

Hence, it may be necessary considering the advances in technology and the vast materials now available, to consider some amendment to the legal system to ensure the maintenance of proper details with regard to copyrighted works. In this regard, my suggestion would be a hybrid of the present system where under copyright subsists as soon as the work is created, but that the same must be compulsorily registered thereafter so as to provide adequate notice to all concerned.

1    Based on the famous opening phrase of the soliloquy in William Shakespeare’s play Hamlet

2    Section 27 of the Trade Marks Act, 1999 and section 48 of the Patents Act, 1970

3    Dhiraj Dharamdas Dewani vs. M/s Sonal Info Systems Pvt. Ltd. 2012 (3) MhLJ 888

4    Article 5 of the Berne Convention for the Protection of Literary and Artistic Works

5    Uttar Pradesh Gram Panchayat Adhikari Sangh vs. Daya Ram Saroj 2007 (2) SCC 138 “Judicial discipline is self discipline. It is an inbuilt mechanism in the system itself. Judicial discipline demands that when the decision of a co-ordinate Bench of the same High Court is brought to the notice of the Bench, it is respected and is binding, subject of course, to the right to take a different view or to doubt the correctness of the decision and the permissible course then often is to refer the question or the case to a larger Bench. This is the minimum discipline and decorum to be maintained by judicial fraternity.”

6    Asian Paints vs. Jaikishan Paints and Allied Products 2002 (4) MhLj 536

7    Dhiraj Dharamdas Dewani vs. M/s. Sonal Info Systems Pvt. Ltd. 2012 (3) MhLJ 888

8    Mayuram Srinivasan vs. C.B.I. 2006 (5) SCC 752

9    Rajesh Masrani vs. Tahiliani Design Pvt. Ltd. AIR 2009 Del 44

10    Satsang & Anr. vs. Kiron Mukhopadhyay AIR 1972 Cal 533

11    Manojah Cine Productions vs. A. Sundaresan AIR 1976 Mad 22

12    R. Madhavan vs. S.K. Nayar AIR 1988 Ker 39

13    Nav Sahitya Prakash vs. Anand Kumar AIR 1981 All 200

14    K. C. Bokadia vs. Dinesh Dubey 1999 (1) M.P. L.J. 33

15    Brundaban Sahu vs. Rajendra Subudhi AIR 1986 Ori 210

16    Dhiraj Dharamdas Dewani vs. M/s Sonal Info Systems Pvt. Ltd. 2012 (3) MhLJ 888

17 Feist Publications, Inc. vs.Rural Telephone Service Company (1991) 499 U.S. 340 wherein the United States Supreme Court, inter alia, held that “To establish infringement, two elements must be proven (1) ownership of valid copyright, and (2) copying of constituent elements of the work that are original.”

Nirav Shah

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JURISDICTION IN MATTERS RELATING TO VIOLATIONS OF INTELLECTUAL PROPERTY RIGHTS INCLUDING IN CYBERSPACE

Trade mark Licensing — Quality Control

Trade mark Law: ‘Parody’

Infringement vs. Passing – off

Copyright Law — The test of originality

Copyright – The Need for Registration?