India: The Patents Newsletter

Last Updated: 2 January 2015
Article by Lall & Sethi Advocates

In the whirlwind of events marking the patent landscape in India, we strive to keep you updated with our regular editions of the Patents Newsletter and bring you patents news from India fresh off the racks!

We begin with the news from the Indian Patent Office (IPO). First the good news! In its endeavor to deliver better services the comprehensive e-filing system has been upgraded with a new payment gateway that allows payments to be made through more than 70 banks. The IPO is also making significant strides towards its efforts to become more transparent and accessible and has started a facility called the 'Stock and Flow' that gives real time access of the work happening in all the four Patent Offices on the IPO website. It is purported to be the first of its kind amongst the IP offices across the world.

Now the bad news! The pendency of patent applications is one of the biggest challenges faced by the Patent Office. It had got a rap on its knuckles from the Chennai High Court in 2011 for inordinate delay in examination of applications but that had little effect on expediting the examination process. We bring you a snippet on another such case where a writ was filed at the Delhi High Court and the Court has given directions to the Patent Office on how to reduce such pendency.

The general trend of upswing seen in the number of conflicts in the patent arena in the past few years continues to be the same: upswing! Other technology areas now vie for this space with the pharmaceutical sector, especially telecommunications and mechanical. We bring you our analysis in a few such cases.

Not be left far behind is Design! We bring you our analysis of some important issues that the Courts have been grappling with vis-à-vis Design enforcement in India.

At Lall & Sethi we continue to explore and discover our limits and strive to overcome them. The entire office went on a three day long exploration trip to the Himalayas and discovered their adventurous side with bungee jumping, zipping, river rafting and such other activities. We share a few pictures of our adventure.

INFRINGED BY DESIGN

Design filings, like utility patent filings, have been growing at a rapid pace in India. The interesting part is that whereas patent filings are dominated by foreign applicants, design filings are dominated by Indian applicants1. Increase in filings invariably leads to increase in enforcement efforts and hence litigation.

In the recent past Courts have been confronted with some very interesting issues vis-à-vis design enforcement in India. We summarize here some of these issues and how they have been settled by case law. These issues that have been plaguing (amongst many others) the users and much needed clarity has been given by the Courts in this regard.

The issues can be summarized below:

  • design is maintainable against another registered design
  • Whether an action of passing off is maintainable in respect of a registered design

Maintainability of a suit for infringement of a registered design against another registered design

Section 22 of the Indian Design Act, 2000 provides for remedies available to a registered proprietor in the event of the piracy of the design. The main contention is regarding the use of the expression 'any person' and what it entails. The pertinent section reads as:

"22. Piracy of registered design.- (1) During the existence of copyright in any design it shall not be lawful for any person - for the purpose of sale to apply or cause to be applied to any article in any class of articles in which the design is registered, the design or any fraudulent or obvious imitation thereof, except with the license or written consent of the registered proprietor, or to do anything with a view to enable the design to be so applied; or to import for the purposes of sale, without the consent of the registered proprietor, any article belonging to the class in which the design has been registered, and having applied to it the design or any fraudulent or obvious imitation thereof, or knowing that the design or any fraudulent or obvious imitation thereof has been applied to any article in any class of articles in which the design is registered without the Whether a suit for infringement of a registered consent of the registered proprietor, to publish or expose or cause to be published or exposed for sale that article.

2. If any person acts in contravention of this section, he shall be liable for every contravention-

(a) to pay to the registered proprietor of the design a sum not exceeding twenty-five thousand rupees recoverable as a contract debt, or

(b) if the proprietor elects to bring a suit for the recovery of damages for any such contravention, and for an injunction against the repetition thereof, to pay such damages as may be awarded and to be restrained by injunction accordingly: Provided that the total sum recoverable in respect of any one design u/cl. (a) shall not exceed fifty thousand rupees: Provided further that no suit or any other proceeding for relief under this subsection shall be instituted in any court below the court of District Judge.

(3) In any suit or any other proceeding for relief under subsection (2), every ground on which the registration of a design may be cancelled u/s. 19 shall be available as a ground of defence.

(4) Notwithstanding anything contained in the second proviso to sub-Section (2), where any ground or which the registration of a design may be cancelled u/s. 19 has been availed of as a ground of defence and sub-s. (3) in any suit or other proceeding for relief under sub-section (2), the suit or such other proceedings shall be transferred by the Court in which the suit or such other proceeding is pending, to the High Court for decision. (5) When the court makes a decree in a suit under sub-section (2), it shall send a copy of the decree to the Controller, who shall cause an entry thereof to be made in the register of designs."

As mentioned earlier Courts have been grappling with the definition of 'any person'. In a number of cases viz. Tobu Enterprises Pvt Ltd Vs Megha Enterprises and Anr (1983 Indlaw DEL 10173), Asahi Glass Co. Ltd. Vs Jai Mata Rolled Glass Ltd. & Anr. (1996(16) PTC 220 (Del.)), Servewell Products Pvt Ltd & Anr. Vs Dolphin (2010(43) PTC 507 (Del.)), Courts have taken the view that a suit of infringement does not lie against a subsequent registration and that the term 'any person' would not include a subsequent registrant.

There is equal number of cases where the Courts have taken an opposite view viz. Tobu Enterprises (P) Ltd Vs M/s Joginder Metal Works and Anr. (1982 Indlaw DEL 125), Alert India v. Naveen Plastics (1996 Indlaw DEL 363), Vikas Jain v. Aftab Ahmed and others (2008 (37) PTC Del), Dabur India v. Amit Jain and another (2008 Indlaw DEL 2232), the Courts have held that a suit of infringement is maintainable against a later registration and that the term 'any person' would also include a subsequent registrant.

In Micolube India Limited vs. Rakesh Kumar Trading As Saurabh Industries & Ors (CS (OS) No.1446 /2011) the Court was again confronted with this issue. Justice Manmohan Singh, while concluding that a suit of infringement does not lie with a subsequent registrant, however referred the matter to a larger bench while himself being a member of the Bench.

The Division Bench of the Delhi High Court (Mohan Lal and another vs Sona Paint and another (2013 Indlaw DEL 1319)) sought to clear the air regarding this issue. The majority judgment of the Full Bench held that "A holder of a registered design could institute a suit against a defendant who is also in possession of a registered design". The Full Bench stated that the previous judgments that held otherwise "failed to appreciate that the registration of a design is prima facie evidence of the fact that the design is unique, novel or original or that it is significantly distinguishable from any known design or combinations of designs. Thus, the registration in that sense creates a monopoly in favour of the registrant for the period prescribed under Section 112 of the Designs Act. The registrant thus has, in our opinion, the right to assert this monopoly against all and sundry, including a subsequent registrant. There are no words of limitation in Section 43, 11 and 22 which would exclude institution of an action against the subsequent registrant. Therefore, in our opinion, the rationale supplied in Tobu Enterprises that the only remedy available to the plaintiff against a subsequent registration would be to seek cancellation of the registration, is flawed." Hence the Full Bench held that the expression "any person" found in the Section 22 of the Design Act would not exclude a subsequent registrant as no such words of limitation were found in the said Section. The dissenting Judge however held that a suit for infringement of a registered design could not lie against another registered proprietor.

It was against this background that this issue again came up in Whirlpool of India Ltd. vs Videocon Industries Ltd (2014 Indlaw MUM 594) in the Mumbai High Court where the Plaintiff had filed a case against the defendants for two of their registered designs of washing machine for infringement, passing off and damages. The Plaintiffs had also taken out a Notice of Motion in the Suit (in 2012) and had moved for an ad-interim injunction in the Mumbai High Court that was granted to them in respect of both infringement and passing off July 2012. The decision was challenged by the Defendant that was rejected by the Appeal Court on 13th August 2012. In the interim period between the filing of the Suit by the Plaintiff the Defendant had applied for registration of their design applied to their washing machine, "Videocon Pebble" to which registration was granted. On 2nd November, 2012, the Defendant preferred a Special Leave Petition (SLP) against the decision of the Division Bench dated 13th August, 2012. In the SLP the Defendant contended that no suit for infringement of design could lie against them since they had secured design registration and also that an action for passing off could not lie in respect of a registered design. As mentioned above, these issues had been taken up by the Full bench of the Delhi High Court which had held that a suit for infringement would lie against a registered proprietor. The dissenting Judge had however differed. At the hearing of the SLP these issues were again contended and the Hon'ble Supreme Court held that it was appropriate to await the decision of the Mumbai High Court inter alia these questions since the Notice of Motion was yet to be decided and deferred the hearing of the SIP.

Analyzing the expression 'any person' the Mumbai High Court held that "S. 22 of the Act thus gives the registered proprietor a right to relief against "any person" who applies the design of the registered proprietor to any article of the class of articles in which the design is registered. The words "any person", which are used without any words of limitation, ordinarily must be given their plain and natural meaning - namely, any person whosoever - unless the statute compels by reason of the context in which the words " any person" are used or by reason of the other provisions of the Act to restrict the meaning of the words to "any person other than a registered proprietor"".

The Court found the submission of the Defendant that a Court could only examine the validity of the Plaintiff's registration but not examine the Defendant's registration "conceptually illogical". The Court explained that if both the plaintiff and defendant are registered proprietors, the defense of provisions of section 194 as available to the defendant against the claims of infringement of the plaintiff's design was also available to the plaintiff as defense against claims of infringement of defendant's design. The Court averred that "The Defendant - proprietor would have a complete defence to the Plaintiff - Proprietor's action only if his (the Defendant's) registration is prior in point of time, since such prior registration is a ground for cancellation of the Plaintiff's registration. A Defendant proprietor, who holds a subsequent registration cannot plead his subsequent registration in defence to an action under Section 22, since a subsequent registration is no defence within the meaning of S. 22 (3) read with S. 19. That is an obvious consequence of S. 22 from the defendant's point of view. Just as a Plaintiff cannot claim a right to relief under S. 22 against a prior registered proprietor on the basis of his (the Plaintiff's) registration, the defendant cannot successfully defend an action under S. 22 by a prior registered proprietor on the basis of his (the defendant's) registration. It, therefore, cannot be argued that S. 22 (3) has implications only for the Plaintiff's registration and not for the Defendant's registration. The Court may consider both the Plaintiff's and the Defendant's registrations in the light of S. 22 (3) and grant or reject the relief to a Plaintiff depending on whose registration is prior in point of time".

Differentiating between the reliefs obtained from section 19 and section 22, the Court held three points of differences between them:

  • While section 19 could be invoked to seek cancellation of a registration of a design, section 22 of the Act could be invoked where a registered design of a proprietor was infringed by any person and the registered proprietor sought reliefs in the form of damages, injunction, etc. against the infringer.
  • Section 19 entitled a party to move the Controller for cancellation of a design even where the registered proprietor was not using the design while section 22 of the Act afforded a cause of action only where a registered design was being applied or caused to be applied to any article for the purposes of sale or in relation to or in connection with such sale. Consequently if a registered proprietor did not apply his design to an article for sale or in connection with such sale, another registered proprietor could not have recourse to S. 22 of the Act.
  • While section 19 was applicable to 'any person interested', section 22 was available only to a small segment of such person viz. registered proprietors.

The Court further averred that it was important to see the Legislative intent behind using the phrase 'any person' in section 22 as against the phrase 'any person other than the proprietor of the design'. Section 295 of the Indian Trades Mark Act for instance unequivocally mentioned the phrase "a person who, not being a registered proprietor...." while enumerating infringement of registered trademarks and limits on effect of registered trademark. Additionally, at various other places in the Design Act different expressions had been used where the Legislature wanted to expressly wished to exclude the registered proprietor. The Court concluded that "I am of the considered view that a registered proprietor of a design can under S. 22 of the Act file a suit for infringement against a registered proprietor of a design".

Maintainability of action of passing off in respect of a registered design

The debate about the remedy of passing off being available in respect of a registered design has been catching the attention of Courts. In Micolube India Limited vs. Rakesh Kumar Trading As Saurabh Industries & Ors (CS (OS) No.1446 /2011), Court held that passing off remedy was not available in respect of a registered design. It held that "Therefore, the prima facie conflict between the two inconsistent remedies can be resolved by applicability of doctrine of election and limited right of passing off exists under the law of trademark wherein the definition of trademark includes shape and configuration of the article but the same cannot be pressed into service when the suitor opts for remedy under the Designs Act where there is no such saving of common law remedy nor is there any common law pre-existing which has been continued under the law. Thus, the relief sought by the plaintiff cannot be granted". The Court however referred the matter to a Larger Bench which gave the majority judgment in favour of passing off action being maintainable in respect of a registered design.

The Larger Bench held that a "design could be used a trade mark and if by virtue of its use, goodwill was generated in the course of trade or business, it could be protected by an action in the nature of passing off. The plaintiff would then not have to look to the Designs Act for instituting such an action." The Court found the argument that the Legislature by not incorporating a similar provision in the Designs Act, such as Section 27(2)6 of the Trade Marks Act had by necessary implication excluded the availability of such a remedy, untenable. "However, if such an action was instituted, the onus to demonstrate, that the registered design was used by him as a trade mark which, in the minds of the purchasing public was associated with his goods or services which had acquired goodwill/reputation which was worth protecting, was on the plaintiff". The Court held that a plaintiff would be entitled to institute an action of passing off in respect of a design used by him as a trade mark provided the action contained the necessary ingredients to maintain such a proceeding and this did not mean that such a suit could be instituted only after the expiry of the statutory period provided under Section 11 of the Designs Act. The reason the Court gave for this was that while the Section 2(d)7 of the Designs Act excluded any trademark from the definition of design, "however the use of the design as a trademark post its registration is not stipulated as a ground for cancellation under Section 19 of the Designs Act." The Court held that The Trade Marks Act did not specifically exclude a design and in fact "shape of goods" could be registered as a trademark. Explaining its stand further the Court asserted that this logic was based on the principle that trademark is something which is extra, which is added on to the goods to denote origin, while a design forms part of the goods. Hence, while it may not be possible to register simultaneously the same matter as a design and a trade mark, however, post registration there could be no limitation to its use as a trademark by the registrant of the design. The dissenting Judge however differed and held that the action of passing off would not lie with a registered design.

On the question if conception of passing off as available under the Trade Marks could be joined with the action under the Designs Act the Full Bench stated that "The two actions cannot be combined in one suit". The Court was of the opinion a composite suit for infringement of a registered design and a passing off action would not lie. The Court could, however, try the suits together, if the two suits were filed in close proximity and/or it is of the view that there are aspects which are common to the two suits. The discretion of the court in this matter would necessarily be paramount.

In Videocon Industries Limited vs. Whirlpool of India Limited (MANU/MH/1248/2012) which was an appeal against injunction, the Court rejecting the appeal against injunction held that "...to sustain the action of passing off, something more than mere similarity between the goods is needed. Merely selling the similar goods without making false representation, no action of passing off can be sustained. Also there must something unique and distinctive in the design which the consumer associates with the product.........that even though Videocon may not have actively misrepresented to the consumer, it has nevertheless knowingly created a tool for deception and thus is guilty of passing off. According to us, action of passing off is clearly made out. The design registered by Whirlpool has been a success and according to them, about three lakh machines have been sold in a short span. The design registered by Whirlpool is very similar to the impugned product. No reason is placed on record as to how the Videocon thought of designing the washing machine with same distinctive shape in June, 2012. To our mind it was to take advantage of popularity of the design of Whirlpool washing machine." The Court hence held that passing off action was maintainable for a registered design.

The Courts were again confronted with this issue in Whirlpool of India Ltd. vs Videocon Industries Ltd (2014 Indlaw MUM 594) (supra). The Court found the Defendants guilty of passing off their goods/products as that of the Plaintiff. The premise on which this was held was that the shape and configuration of the Plaintiff's design of washing machine was unique and hugely popular and the Defendant's design of washing machine was identical. The Court held that "reason of the fact that no other washing machine with a similar or comparable shape existed in the market prior to the introduction thereof by the Plaintiff, the said novel shape and/or configuration and/or get up and/or overall appearance has come to be identified and/or associated exclusively with the Plaintiff. The existence of the goodwill and/or reputation in the shape of the products stood established" With regards to novelty "The first impression has to be of a person with average intelligence and/or imperfect recollection." So there was every possibility that such a person would be confused between the two designs and would mistake the Defendant's product for that of the Plaintiffs. "Such a person would purchase the Defendant's product on the belief that it was the Plaintiff's product or was associated with the Plaintiff. This clearly constitutes passing off."

From above analysis it appears that the Courts have tried to give some clarity with regards to the twin issues of maintainability of a suit of infringement against registered proprietor and maintainability of action of passing in a registered design. The Courts have given the view in the affirmative. Now it will be interesting to see how the Hon'ble Supreme Court settles this issue.

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