Case BriefsHigh Courts

Madras High Court: While relying upon the Supreme Court decision in Midas Hygiene Industries (P) Ltd. v. Sudhir Bhatia, (2004) 3 SCC 90, the Single Bench of K. Kalyanasundaram, J. has observed that an injunction would normally follow in the cases of infringement of  intellectual property rights, especially when the dishonesty qua the defendants was apparent, and a mere delay would not be a ground to deny an order of interim injunction in such cases.

The plaintiffs submitted that the defendants had deliberately copied their registered bottle design, and thereby had caused design infringement and passed off their bottles as that of the plaintiffs. The defendants contended that there was no novelty in the design of the plaintiffs since the curves on the bottles and the vertical projection on the caps were functional features, and similar designs were in public domain even prior to the plaintiffs’ design registration, hence, the design registration was invalid. The defendants also submitted that they had been selling the alleged infringing products from past five years to the knowledge of the plaintiffs, therefore, as per Section 41(g) of the Specific Relief Act, the plaintiffs had acquiesced their right.

The High Court noted that it was an admitted fact that the plaintiffs’ design was registered in 2008, whereas the defendants launched the impugned design only in 2011. Moreover, it was not the case of the defendants that they were prior user of the design. The defendants had also not produced any material to substantiate their submissions that the designs of the plaintiffs were not new and the similar bottled designs had been used previously. Also, since the defendants themselves claimed to be the registered proprietor of similar designs, hence, they could not be permitted to approbate and reprobate as to the registrability of the bottle design. The Court also noted that the utility of the grip of a bottle, or the feature to facilitate the opening of the cap, could also be attained by other design options, therefore, such features could not be considered as “essentially functional”. The Court, thus, concluded that the design of the plaintiffs had been copied and adopted by the defendants, and the plaintiffs had made out a strong prima facie case for the grant of interim injunction. [Dart Industries Inc v. Cello Plastotech, 2017 SCC OnLine Mad 1851, decided on 12.05.2017]

Case BriefsHigh Courts

Delhi High Court: In a case regarding Intellectual Property Rights, the plaintiffs-manufacturer of water purifiers sought protection by obtaining design registrations under the Designs Act, 2000 in respect of the aesthetic appearance of its water purifier systems stated that products covered by the plaintiffs registered designs are being marketed and sold by the defendant through e-commerce platform-Ebay constituting piracy under the Designs Act, 2000 and alleged that Ebay’s action of permitting the defendant to advertise, offer for sale and sell its products too amounts to infringement of the plaintiffs rights under Section 19 of the Designs Act.

The plaintiffs sought relief against Ebay to take down, remove, delist all products infringing the registered designs of the plaintiffs and issue of prohibitory injunction to from allowing products infringing the registered designs of the plaintiffs being offered for sale and sold from their portal. Plaintiffs contended that Ebay being an intermediary had a duty to do due diligence in order to ensure that before posting any information on its computer resources, it is important to satisfy itself that the same does not infringe the intellectual property rights of any person.

Ebay averred referring to Section 79 of the IT Act, 2000 which states that an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him. The Court accepted this contention observing that asking the intermediary e-commerce websites to screen the products they advertise for infringement of IPR would amount to an unreasonable interference with the rights of the intermediary to carry on its business.

The Court held that the intention of the Legislature has been to require the intermediaries to be vigilant and to only declare to all its users its policy and advise them not to host any infringing information on the website of the intermediary and to on receipt of complaint remove the same within 36 hours whereas no requirement of keeping a check upon the nature of products being advertised has been posed by the Legislature and did not pass any such directions to ebay as sought by the plaintiffs. [Kent RO Sytems v. Amit Kotak, 2017 SCC OnLine Del 7201, decided on 18.01.2017]

Case BriefsHigh Courts

Delhi High Court:  Dealing with the question of situs or location of intellectual property rights  in logos, trade marks and brands with reference to the income accruing in India from intangible assets, the Court held that income accruing from the transfer of intangible assets like intellectual property whose owners were not based in India cannot be taxed in India.

The issue related to the transfer of 16 trade marks and Foster’s brand intellectual property of the petitioner, Foster’s Australia Ltd. to SABMiller executed in Australia. By a brand licence agreement executed earlier, Foster’s India Ltd. had been permitted to use 4 trade marks in India. The licensed trade marks continued to remain the absolute property of the petitioner who received royalty and was subjected to withholding tax in India. The petitioner sought an advance ruling from the Authority for Advance Ruling (Income Tax) under Section 245-Q of the Income Tax Act regarding the issue of taxability in India having regard to the provisions of the Income Tax Act, 1961 and the Double Taxation Avoidance Agreement between India and Australia.

The AAR ruled that the income accruing to the applicant from the transfer of its right, title and interest in and to the trade marks and Foster’s brand intellectual property is taxable in India under the Income Tax Act, 1961 on the ground that the subject-matter of assignment/transfer were situate in India.

The petitioner’s plea was that in the case of intangible capital assets the situs thereof has to be determined by the situs of the owner. Because of the nature of an intangible capital asset, the common law principle ‘mobilia sequuntur personam’ had been evolved, whereby a fiction is created to the effect that the situs of an intangible capital asset would be the situs of the owner of that asset. In this backdrop, since the owner of the intangible assets in question was located in Australia, the petitioner, being an Australian company, the intangible assets, which include the intellectual property rights of the petitioner, were also located in Australia. Therefore, the transfer of those assets would not result in any income deemed to have accrued in India and would not be exigible to tax in India. The AAR was of the view that since the intellectual property rights pertain to India, as they were used and nurtured in India and some of them were registered in India, the same had taken roots in India and therefore, were completely situate in India.

Upholding the petitioner’s contention, the Division Bench of Badar Durrez Ahmed and Sanjeev Sachdeva, JJ. observed that in the absence of a specific provision regarding intangible assets, the well-accepted principle of ‘mobilia sequuntur personam’ would have to be followed. The situs of the owner of an intangible asset would be the closest  approximation of the situs of an  intangible asset. This is an internationally accepted rule, unless it is altered by local legislation. Since there is no such alteration in the Indian context, the situs of the trademarks and intellectual property rights, which were assigned pursuant to the ISPA, would not be in India. This is so because the owner thereof was not located in India at the time of the transaction.The Court held that the income accruing to the petitioner from the transfer of its right, title or interest in and to the trademarks in Foster’s brand intellectual property is not taxable in India. [CUB Pty Ltd. (formerly known as Foster’s Australia Ltd.)  v.  Union of India, 2016 SCC OnLine Del 4070, decided on July 25, 2016]