Off-Topic: The storm between the Fest- The Satanic Verses plays Tempest

The Indian media over the last one week, has been flooded with news relating to one man- Booker prize winner Salman Rushdie. As the Jaipur Literary festival took stage, a few authors chose to read from his book “The Satanic Verses” – his work that was banned from release in India in 1988, on the pretext that the contents were hurtful to the religious sentiments of Muslims residing in India.

The controversy surrounding the book really took centre stage, as some authors chose to read excerpts from The Satanic Verses . The readers of excerpts state that they did so, not from the book, but in fact from excerpts available online. The readers of the excerpts, were advised to leave Jaipur for the fear of arrest.

The fact that disturbs me is that while the book is banned for release, sale, import etc. in India, would reading of its excerpts also qualify as an act that would be actionable under law???

One of the issues that bothers me is the issue of access. Although physical copies of the book are unavailable, the presence of its extracts in the internet space, does facilitate access, even though the extent of it may be limited. In this view can reading an excerpt really put one into trouble?

Another aspect is, what about freedom of expression? We know of several authors, painters,and film makers who choose rather provocative subjects. And so long as the readers chose extracts that were in fact not so provocative, should they be really threatened? And more so, in the context of a book, how would one judge what is distasteful to many, separated from the rest of the body of the work that travels with it?

While everyone, including retired Justices of the Supreme Court of India, has had something to say, this issue and the blowing up of it itself has left a bad taste in my mouth.

On one hand, in the world of Intellectual Property we talk of creative freedom, so much so that we have disregarded registration as an essential to enforce one’s rights in a work; On the other, the world of constitutionality talks of freedom of speech and expression. And yet some authors in appreciation, criticism or by reference, referring to a banned book is a taboo..

I am really at loss of an opinion- is this a reflection of the fact that we are still where we were, close to 25 years back??? Or, is this just an attempt to make a noise, specially since, we are considered a society that has always been open to interpretations, versions and fables to follow..

Delhi High Court: Both Counter-claim and Revocation Petition Can Continue Concurrently (?)

“Should the respondents/the original defendants be permitted to continue the prosecution of proceedings for revocation of patents instituted by them, before the Intellectual Property Appellate Board (in short “IPAB”) when, purportedly, they have elected to prosecute their counter claims for revocation of the very same patents, in the suits for infringement, filed by the appellant, who is the original plaintiff?”

This was the issue in an appeal before a Division bench of the Delhi High Court in Dr.Alloys Wobben v. Yogesh Mehra & Ors. The appeal was decided yesterday, January 20, 2012 with the Court dismissing the appeal.


FACTS:

Yogesh Mehra, the responsdent/defendant, filed revocation petitions under Section 64 of the Patents Act, before the IPAB starting from 2009 until 2011 against the patents of Dr.Aloys Wobben. 19 of the total 23 revocation petitions were filed before the IPAB in 2009. 


In a writ petition filed by Dr.Wobben against the revocation petitions, the Madras High Court ruled against Dr.Wobben and directed the IPAB to hear and dispose of the revocation petitions within a period of 3 months.

Besides filing revocation petitions, Yogesh Mehra also filed counter-claims to the 6 suits for patent infringement instituted by Dr.Aloys Wobben. Each of the 6 counter-claims challenged the validity of the very same patents against which revocation petitions were filed before the IPAB. 

In late 2010, Dr.Wobben filed an application before the Delhi High Court seeking stay of proceedings before the IPAB. This application was dismissed by the Single Judge of the High Court. Against this dismissal, Dr.Wobben preferred the appeal in discussion.


DISCUSSION:

Counsel for Yogesh Mehra, the respondent, submitted that when the “nature of challenge” on the same issue between 2 fora (“forums”) was materially different, then both proceedings can continue concurrently. The Division Bench too concurred with this argument of the respondent and dismissed the appeal. 


By “nature of challenge”, the respondent sought to strike the distinction that before the IPAB, the challenge was in the form of a “revocation petition”, whereas the action before the High Court by the respondent was in the nature of a “counter-claim”/counter-suit. Therefore, according to the respondent, both the counter-claim and the revocation petition could continue concurrently before two different forums.

The Court also took the view that only when the two proceedings are inconsistent with each other, a party was required to elect between the two (“doctrine of election”). To support this view, the Bench relied upon a judgment of the Supreme Court according to which- where the remedies are not inconsistent, but are alternative and concurrent, there is no bar until satisfaction has been obtained, unless one part gains an advantage or the other suffers a disadvantage.

To me, this view appears flawed for the following reasons:

1. The IPAB was constituted with the object of creating a forum with the expertise to deal with the issue of patent validity.

2. Further, given that the IPAB is treated as an appellate body, which hears appeals against the decisions of the Patent Office, it must be treated as a body with original jurisdiction to deal with revocation of patents.

3. Section 64 uses “or” when it refers to a revocation petition and a counter-claim in a suit. This means, a party has to choose between filing a revocation petition before the IPAB and a counter-claim in a suit for infringement. It does not appear either correct or permissible to file both.

4. Further, as rightly contended by the patentee, litigants and courts must endeavour to avoid instituting parallel proceedings which could lead to conflicting decisions and could embarrass both forums. This is the spirit behind section 10 of the Code of Civil Procure which refers to Stay of Suits. 

5. Regardless of the so-called difference in the nature of proceedings between a revocation petition and a counter-claim, the fact of the matter is that both proceedings deal with the same issue, namely patent validity and between the same parties. Therefore, the argument of difference in “nature of proceedings” does not hold water, at least in my view. It certainly does not hold water in light of the framework of the Patents Act.

The respondent countered that there is no provision in the Patents Act similar to Section 124 of the Trademarks Act. Section 124 of the TM Act requires stay of suit proceedings when a rectification petition is filed against a registered trademark. The absence of a similar provision in the Patents Act, according to the respondent, was a clincher and proved that proceedings before the IPAB cannot be stayed.

I am not sure the argument of the respondent draws the correct parallel. Section 124 of the TM Act deals with stay of suit proceedings; whereas in the case, the patentee sought stay of proceedings before the IPAB which had been instituted prior to the filing of the suits for infringement. Therefore, comparisons between Section 124 of the Trademarks Act and the Patents Act are of no relevance, at least in my view.

The comparison would have been relevant had one of the parties (respondent) sought stay of suit proceedings before the Delhi High Court until such time the revocation petitions were disposed off. This was clearly not the case here.The Court alludes to this in Para 12 of the judgment as follows:

“It would be trite to say that principles analogous to section 10 of the Code (Code of Civil procedure) empower a court to stay a suit pending before it if, the cause and parties before it are substantially the same and, the court dealing with the earlier action would have the jurisdiction to deal with the latter action as well. Where Section 10 of the Code does not apply sensu stricto, power is exercised by a court, often under Section 151 of the Code. The supervening object being, to avoid conflict of judgments and decrees. There is no difficulty with the principle, it is its application which at time causes problems. If we were to apply this principle, then we should ordinarily be staying the latter proceedings, that is, the suits pending in this court to await the result of the IPAB action.”

In my opinion, the following makes sense- if revocation proceeding is filed before the IPAB prior to the filing of the suit for infringement, a counter-claim to the suit challenging the validity of the patent must be not be entertained or must at least be stayed. This is because two proceedings addressing the same issue between the same parties and which are capable of delivering the same relief must not be continued concurrently.

In fact, going by this logic, it would have made sense for Dr.Wobben to seek stay of the counter-claims since 19 revocation proceedings had been preferred before the IPAB prior to the institution of the counter-claims.


But my guess is that probably Dr.Wobben did not want the IPAB to deal with the issue of revocation, for reasons best known to him. Probably, Dr.Wobben felt the IPAB proceedings could delay or adversely affect the expeditious disposal of the suit proceedings, and therefore he wanted those proceedings withdrawn or at least stayed.

Interestingly, in this case, the relief sought by the patentee does not appear to be the right one, and the position of the law postulated by the Court is flawed too. What is surprising is that the Court even awarded a cost of INR 5 lakhs (INR5,00,000) to the respondents.  We certainly live in interesting times...

Can the use of Numerals qualify as Descriptively Fair?

As trademark practitioners, a phrase that becomes an integral part of our daily jargon, and one that we rattle off, at the drop of a pin, is “likelihood of confusion”. Undoubtedly, a vital concept, that forms the central theme of trademark jurisprudence, however, cannot be a sole ground to move civil action in Court. 

In other words, while an action of infringement or passing off against another trademark, must have a finding that leads in the direction of “likelihood of confusion”, the same does not suo moto form the basis for civil action.

Perhaps, what I have just summarized is the crux of what an appeal at the Delhi High Court, in the case of Radico Khaitan Ltd. v. Carlsberg India Pvt. Ltd, held. Interestingly, two alcohol manufacturers were at row with each other, for their marks that used the numeral 8 in common. The action was said to be "one for infringement and in the alternative for passing off". 

Radico are registrants of the mark 8PM used for whisky, while Carlsberg sells beer under the mark “PALONE 8”. Further grievance was that Radico’s slogan “AATH KE THAATH” (the luxury of eight) pertaining to the trademark “8 PM” had been piggy ridden on by Carlsberg by using the slogan “8 KA DUM”, meaning the potency of 8 .

The decision makes for an interesting read, albeit on other fronts- While the decision does not delve on the slogan being under copyright or trade mark protected, the court looked at the viability of numerals,and related non-exclusivity under the scope of trade mark protection.

However, observing here (as also in the impugned judgment), that the numeral 8 was in common usage in the alcohol industry, perhaps to describe the percentage strength of the alcohol, the Judge stated that:

"A holder of a protectable descriptive mark has no legal claim to an exclusive right in the primary, descriptive meaning of the term; consequently, everyone is free to use the term in its primary, descriptive sense; but with a caveat. 

The caveat is that: "so long as such use does not lead to consumer confusion as to the source of the goods". And in an action for infringement the "fair use" defence is available only to situations where the alleged infringer employs a trademark in its descriptive sense, as opposed to as a trademark.”

In analyzing whether Carlsberg’s use of the numeral 8 qualified the “descriptive fair use” standard, the Court addressed three questions:

(i) Does the numeral 8 indicate any quality, functionality, property, content etc. of the product itself?

In addressing the first question, the Court noted that the alcohol content in the beer being 7.5%, the adoption of 8 was in fact arbitrary. I personally disagree, and believe that the adoption was in fact descriptive, atleast in the choice of numerals. Else, why not any other number?

(ii) Does the numeral “8” appear „in a manner of speaking on the label or has been given undue prominence so as to appear as a trademark?

The Court here observed that the numeral being several times larger than the text was clearly not written with an intention to be a mere descriptor, but to be the most prominent component of the label, which cannot be termed as descriptive fair use and is clearly in the nature of trademark use.

(iii) Does the product, aside from the numeral "8", carry any other mark which is intended to be the "brand name" or "trademark" by which consumers are to ask for the product?

The Court opined that the consumer is most likely to tell the bartender or the salesman at a liquor vend: "Give me beer 8" and not "Give me beer Palone 8", since 8 is the single most prominent feature of the label and that consumers are most likely to identify with the same. I disagree with this too- I don't think most beer drinkers would be so oblivious of their brand preferences.

The Court denying injunction concluded as:

A. Radico had a registration for “8 PM” as a composite mark. Thus, it could not claim exclusivity over the single numeral “8” to restrain Carlsberg for trademark infringement.

B. Carlsberg cannot rely on descriptive use as a defence to pre-empt Radico's claim.

C. For passing off, the last two prongs of the classical Jif Lemon trinity have to be applied to test if there is any consumer confusion (or likelihood thereof) and any resultant damage caused to Radico by the impugned use of the numeral "8" by Carlsberg.

While it is admirable that this court attempted be creative and introduce to Indian Trade mark jurisprudence a concept such as descriptive fair use, I feel this wasn’t the best instance to do so. The concept to my mind finds application in the use of a trademark itself, and not a numeral or colour, that has been denied exclusivity in the regular course of trade mark prosecution history.

Having admitted that this was a composite mark, I think the court should have looked at factors akin to the Polaroid factors, rather than dwelling so deep into the doctrine of fair use.

Collective Bargaining and Cartel-like Conduct- II

In the last post, I had discussed the possibility of pegging collective bargaining as a defense within the Proviso to Section 3(3) of the Competition Act. 

I had suggested that a collective stance taken by entities/persons which/who are placed similarly may be treated as a joint venture agreement which increases the efficiency in provision of services.

It is certainly possible to argue that an agreement entered into by parties with the ultimate object of preventing reduction in efficiency of services, too could be construed as a joint venture which increases the efficiency in provision of services.

After all, , if the intention of parties to a collective bargaining initiative/joint venture agreement is to ensure that the industry remains competitive, and that overall transactions costs do not increase, such an initiative/agreement must necessarily be seen as increasing the efficiency of the industry.

Simply put, in judging the object behind and effect of a collective act, and to decide if it can be legitimately treated as “collective bargaining” under the Proviso to Section 3(3), logic and law dictate that one must have regard to surrounding circumstances such as:

A. the nature of the business;

B. parity between parties;

C. the root cause/bone of contention;

D. alternatives to collective bargaining;

E. past negotiations/parleys between warring factions and like factors.

This is mandated by Section 19(3) which states that the Competition Commission of India “shall” have “due regard” to factors stipulated in Section 19 in determining whether an agreement has an “appreciable adverse effect” on competition.

In other words, if the CCI chooses to focus only on the effect with absolutely no regard to the cause, not only in the enquiry incomplete, the very legality of the enquiry can be challenged as unlawful under the Act.

Collective bargaining agreements among small business have been recognized as exceptions to cartel-like conduct in Australia. Following is the observation of the Committee of Inquiry for the Review of the Trade Practices Act of the Australian Parliament, also known as the "Dawson Committee”:

“In some industries a number of competing small businesses must bargain with big business. Individually, the small businesses may lack bargaining power and so may seek to join together and bargain collectively, thereby exercising a degree of countervailing power to that of big business. Collective bargaining at one level may lessen competition but, at another level, provided that the countervailing power is not excessive, it may be in the public interest to enable small business to negotiate more effectively with big business”

Even under the Taiwanese Competition Law, a collective effort by Small and Medium Enterprises (SMEs) for purposes of improving their efficiency or increasing competitiveness is permissible.

It also appeals to one’s sense of fairness that smaller entities who individually do not have a say at the negotiating table, must be in a position to come together to voice their grievances. This would probably go to the very root of competition jurisprudence, which is to provide a legal mechanism to redress market-place bullying.

Instead of relying on interpretation to legitimise collective bargaining, it would probably help to amend the law to expressly provide for collective bargaining by small business as a legitimate exception to cartel-like conduct. 

Correction

In the last post, I had inadvertently termed the right to collective bargaining as a fundamental right. I have corrected it to “legal right”

Competition Act: Is Collective Bargaining a Defense to Section 3(3) of the Competition Act?

In an earlier post, I had mooted a discussion on Competition Law. In this post, the approach to Section 3(3) of the Competition Act is being dealt with.  Section 3(3) reads as follows:

(3) Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which—

(a) directly or indirectly determines purchase or sale prices;

(b) limits or controls production, supply, markets, technical development, investment or provision of services;

(c) shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way;

(d) directly or indirectly results in bid rigging or collusive bidding;

shall be presumed to have an appreciable adverse effect on competition:

Provided that nothing contained in this sub-section shall apply to any agreement entered into by

way of joint ventures if such agreement increases efficiency in production, supply, distribution,

storage, acquisition or control of goods or provision of services.

The provision deals with cartel-like conduct. Like most provisions of the Competition Act, 2002, it raises rebuttable presumptions of anti-competitive conduct. This is clear from the phraseology of Section 3(3) which says “shall be presumed to have an appreciable adverse effect on competition in India”.

Precisely because the presumption is rebuttable, a strict “per se” approach to the behaviour of a party under Section 3(3) would be wrong in law. Stated otherwise, a narrow view of an allegedly anti-competitive action/agreement would run counter to legislative intent.

Further, the provision speaks of “appreciable adverse effect”. Why does the provision use “appreciable”? Does this mean “appreciable” qualifies the alleged “adverse effect”? I think, by using the word “appreciable” before the words “adverse effect”, the Legislature intends to frown upon only those agreements whose adverse effect is appreciable/significant and which is a clear consequence of an impugned agreement.

In the event the adverse effect is not “appreciable”, such an agreement is out of the purview of Section 3, and is hence not anti-competitive.  In other words, a non-appreciable adverse effect could actually be a legitimate defense to an allegation under Section 3 of the Act.

What other legitimate grounds of defense are available to a party which is accused of cartel-like conduct under Section 3(3)? The Proviso to Section 3(3) comes to the aid of a party accused of cartel-like behaviour, in rebutting such a presumption/allegation. Simply put, the Proviso to Section 3 is an exception to the proscriptions of Section 3(3).

Now, does collective bargaining fall within the scope of the Proviso to Section 3(3)? Let’s read the Proviso again:

Provided that nothing contained in this sub-section shall apply to any agreement entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services.

The reference in the Proviso is to “any agreement entered into by way of joint ventures”. Does the Act define “joint venture”? No.

“Joint venture” has been typically susceptible to judicial interpretation which has progressively expanded over time. Therefore, would it be impermissible to include “collective bargaining” within the scope of “joint venture”? I don’t think so.

Has the Competition Commission of India (CCI) commented on “collective bargaining”? In a decision delivered last year in FICCI – Multiplex Association of India v. United Producers/ Distributors Forum, the CCI has recognized the permissibility of “collective bargaining” as a legitimate argument. The relevant para is as follows:

“23.48  Collective bargaining may not be  per se bad in law and may be resorted to for legitimate purposes in accordance with law.  However, when the trade associations enter into agreements, as in the present case, in the garb of collective bargaining which are anti – competitive in nature, then no competition watchdog can countenance such act/agreement.  Resultantly, the plea of collective bargaining, in the facts of the present case, is without any merit and the same is directed to be dismissed.”

It is clear from the above that the argument of collective bargaining, which is permissible in law, was rejected in the Multiplex case only on the basis of facts. Therefore, if the facts of the case had supported the argument, collective bargaining would have been tenable in that case.

An act of collective bargaining must necessarily be seen as a defense to an allegation under Section 3 because not only has it been recognized as a legal right by the Hon’ble Supreme Court of India, but also because it preserves the very intention of the Legislature as reflected by the Statement of Objects and Reasons to the Act:

“ to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.”

Also, collective bargaining by members of an association, although a horizontal agreement, could be treated as a “joint venture” under the Proviso to Section 3, provided the intention behind such collective bargaining/joint venture is not anti-competitive.

How do foreign regimes deal with “collective bargaining” under their competition laws?...to be continued

Trade Marks and Domain names - Can there be a broken link?

A recent decision of the Delhi High Court, deals with the inextricable link between Domain names and Trade Marks, and more specifically a domain name containing a generic term - namely,“internet”. 

The decision addresses petitions that challenge an award by the sole Arbitrator, appointed by the National Internet Exchange of India (NIXI) to adjudicate the issue.

The domain name “internet.in” was registered by one Stephen Koenig, and was complained against as being identical and confusingly similar to Jagdish Purohit’s trademark “internet”. It was alleged that the acquisition of the domain name was a fall out of Koenig having no legitimate interests in the domain name, and hence, acquired in bad faith. 

The Arbitrator in view of the nature of the term "internet" and .IN Dispute Resolution Policy (INDRP), had awarded that the domain name be struck down and denied the plea to transfer the domain name to Purohit.

The High Court, however, held that the cancellation of the registration of the domain name ‘internet.in, would not automatically entitle the transfer of the domain name in favour of the defendant. Clearly, as the Court noted, the Respondent was unable to show that he was actually using the trademark ‘internet’ in his business.

Additionally, the Court stated that the fact that the word ‘internet’ is generic and that the trademark ‘internet’ of the Respondent is therefore a weak one, are relevant considerations that support the decision of the learned Arbitrator to decline the prayer for transfer of the domain name ‘internet.in’ in the respondent's favour.”

To this extent, the Delhi High Court, was in agreement with the Arbitrator’s decision. However, in one sentence, the Judge held that the direction in the impugned Award that the domain name ‘internet.in’ should be confiscated and kept by the .IN Registry, be set aside.

This to me, seems somewhat strange. If a term is generic, and hence a holder of a related domain name is said to be squatting upon the use of such a domain, why should the same not be confiscated? After all, if the law governing domain names follows the rationale behind trade marks, this is a natural corollary, especially since generic terms are disentitled from protection as trade marks.

If this is the case, what about trademarks that have become generic? The most common example that comes to my mind is Google, which has attained a tone of usage similar to a verb, rather than being used as a proper noun or adjective. 

Am sure a player as big as Google has acquired domain names with nearly every possible top-level domain name. So in a hypothetical situation, where a deceptive or confusingly similar variant of google.com is registered as a domain name, will Google loose all its rights? Or is Genericism a trade off to being as big a brand as Google is?

I think some of our readers will be able to throw in some predictions. For now, I hope that 2012 brings about interesting quirks and questions for the blog to pursue!!