Friday, April 4, 2014

Is a Composite Suit for Design Infringement and Passing off of the Design Maintainable?

Last May, I had reported a full-bench opinion delivered by the Delhi High Court on the following issues:

(1) Whether a suit for infringement of registered design is maintainable against the another registered proprietor of the design under the Designs Act, 2000;

(2) Whether there can be availability of remedy of passing off in the absence of express saving or preservation of common law of Designs Act, 2000 and more so when the rights and remedies under the Act are statutory in nature; and

(3) Whether the conception of passing off as available under the trademarks can be joined with the action under the Designs Act when the same are mutually inconsistent with that of remedy under the Designs Act.

Following is the majority opinion of the Court on these issues:

(i) A plaintiff could institute a suit for infringement of a design against a defendant, who was also a holder of a registered design. The expression "any person" found in Section 22 of the Designs Act would not exclude a subsequent registrant as, according to us, no such words of limitation are found in said Section.

(ii) The 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 contains the necessary ingredients to maintain such a proceeding. The argument that such a suit could be instituted only after the expiry of the statutory period provided under Section 11 of the Designs Act, does not find favour with us. This is for the reason that in a given fact situation the plaintiff may have commenced the use of the design as a trademark after its registration. While Section 2(d) of the Designs Act excludes from the definition of a design, any trademark which is defined as such in clause (v) of sub-Section (1) of Section 2 of the 1958 Act or property mark, as defined in Section 479 of the IPC, or any artistic work as defined in clause (c) of Section 2 of the Copyright Act -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.

(ii) (a) In this context we must note the argument of Ms Singh, learned amicus, that passing off action may perhaps be maintainable provided the mark has attained secondary meaning. In our opinion, the issue before us is limited to whether a remedy by way of passing off action would be available qua a registered design used as a trademark by the plaintiff - we are not inclined to comment on the quality of evidence which may be required, if at all, to be produced by the plaintiff to prove whether the mark has acquired the necessary secondary distinctive meaning, for him to secure success, in the action instituted in that behalf.

(iii) We are also of the view that 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 are 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.

36. Accordingly, our answers to the three issues are as follows:
ISSUE No.I: A holder of a registered design could institute a suit against a defendant who is also in possession of a registered design
ISSUE No.II: A holder of a registered design can institute an action for passing off.
ISSUE No.III: The two actions cannot be combined in one suit

Recently, I had the occasion to re-visit the Court’s opinion on issue 3 i.e. is a composite suit for infringement of a registered design and for passing off of the design maintainable? Simply put, can the two causes of action be combined in the same suit? Both the majority and the minority opinions of the Court had answered in the negative.

I am not sure I agree with the opinion of the Hon’ble Court because if it is possible to file a composite suit for copyright and trademark infringement or a composite suit for trademark infringement and passing off, both of which arise from the same act or series of acts of the defendant, why is a composite suit for infringement of a registered design and passing off of the design not maintainable? Filing of civil suits and combining causes of action are issues dealt with by the Code of Civil Procedure, 1908 (better known as ‘CPC’ as opposed to ‘CCP’). The relevant provision to look into is Order 2, which deals with framing of a suit. In particular, Rule 3 of Order 2 is extracted below:

3. Joinder of causes of action
(1) Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiff's having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit.

(2) Where causes of action are united, the jurisdiction of the Court as regards the suit shall depend on the amount or value of the aggregate subject-matters at the date of instituting the suit.

Clearly, the provision deals with “joinder” of multiple causes of action in the same suit against the same defendant(s). If it is accepted that infringement of a registered design, and passing off of the design are two independent causes of action which arise from the same act or series of acts in a transaction of the same defendant(s), under Order 2 Rule 3 of the CPC both causes of action may be combined to file a composite suit, provided of course that both causes of action arise within the territorial jurisdiction of the same Court (following the law laid down by the Supreme Court in Dhodha House v. S.K.Maingi).

After all, the running of theme of the framework of the CPC is that multiplicity of proceedings must be avoided wherever it can be avoided. Therefore, if multiple causes of action arise in the same infringing act or series of acts of the defendant, the CPC provides a mechanism to combine the causes of action for a consolidated adjudication by the same Court on multiple aspects of the defendant’s conduct.

Surprisingly, there is no discussion of Order 2 Rule 3 in both the majority and minority opinions. I am honestly unsure of the reason for the absence of a discussion on the applicability of this provision to the issue, since to my mind the provision appears most pertinent to it. Instead, the Court, in its majority opinion, undertook a discussion on Order 2, Rule 2 which deals with inclusion/severability of claims and reliefs. The provision is reproduced below:

2. Suit to include the whole claim
(1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.
(2) Relinquishment of part of claim. --Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.
(3) Omission to sue for one of several reliefs.--A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; hut if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.

This requires us to understand the distinction between “claim”, “relief” and “cause of action” because clearly they aren’t the same, as reflected by the wording of Order 2 Rule 2 itself. Once the distinction is understood, it becomes easier to appreciate as to which of the two provisions, Order Rule 2 and Order 2 Rule 3, apply to the issue at hand.

“Cause of action” has been defined, and accepted by the Supreme Court to mean “every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved." Simply put, a fact which has resulted in or amounts to infraction of the Plaintiff’s right that has in turn given rise to a “cause”/ his right to sue is “cause of action”.

Since a “claim” is made in respect of a “cause of action”, it perhaps refers to the redressal sought by way of compensation for the infraction of the Plaintiff’s right. On the other hand, “relief” refers to the form of solace that the law offers to an injured Plaintiff. Consequently, “reliefs” under the law could mean injunctive reliefs, pecuniary reliefs and the like. These “reliefs” constitute “prayers” in the Plaint.

Based on the above, it is clear that infringement of a registered design, and passing off of the design fall under the category of “causes of action”, meaning thereby that in order to understand where the 2 may be combined in a suit, the provision to be looked into is perhaps Order 2, Rule 3, and not Order 2, rule 2.

To summarize, I think it is possible to file a composite suit for infringement of a registered design and for passing off of the design. I look forward to the opinions of our readers.

Tuesday, April 1, 2014

Delhi High Court Restrains NATCO from Exporting Generic Version of Bayer’s Nexavar under the Compulsory Licence

In a Writ Petition (W.P(C) 1971/2014) filed by Bayer Corporation in the Delhi High Court, NATCO has been restrained, by order dated March 26, 2014, from exporting generic versions of Bayer’s patented drug Nexavar (IN215758) on which a Compulsory Licence was issued by the Controller of Patents on March 9, 2012 and upheld by the IPAB on March 9, 2013.

In its petition, Bayer sought the Court’s intervention to direct the Customs authorities to seize and confiscate NATCO’s generic version of Nexavar, “Sorafenat” since the Compulsory License granted to NATCO allowed it to sell the drug only within the territory of India. In this regard, it would help to refer to Section 90 of the Patents Act, 1970 which spells out the terms and conditions under which a Compulsory Licence is granted. Section 90(1)(vii) and (ix) read as follows:

“(vii) that the licence is granted with a predominant purpose of supply in the Indian market and that the licensee may also export the patented product if need be in accordance with the provisions of sub-clause (iii) of clause (a) of sub-section (7) of section 84;

(ix) that in case the licence is granted to remedy a practice determined after judicial or administrative process to be anti-competitive, the licensee shall be permitted to export the patented product, if need be.”

Under Section 90(1)(vii), it appears that a compulsory license is granted for the “predominant”, and not for the “sole” purpose of supply of the patented article in the Indian market. In other words, the Controller may grant a compulsory license to develop an export market as well. However, such a right of export must be expressly provided for in the licence.  Similarly, under Section 90(1)(ix), it appears that permission must be expressly granted to export the patented product if the licence is granted to remedy an anti-competitive practice, subject to there being a need for export.

In the facts of the case, Clause (g) of the Terms and Conditions of the licence clearly stipulate that the grant of the licence is limited to the territory of India. NATCO denied that it had violated this stipulation and submitted that the availability of the drug outside the country was to be attributed to individual buyers and retailers abroad. After hearing the parties, the Court directed NATCO to ensure that no consignment containing the drug covered by the Compulsory License was exported.

NATCO also sought permission to send samples of active ingredients of the drug for generation of clinical data for submission to the Drug Controller General of India. To this request by NATCO, strangely, the Court granted it the liberty to apply to the Court “for permission to export the drug as and when it obtains permission from the DCGI for clinical purposes”. I am not sure if NATCO’s request was understood correctly because NATCO was making a valid request under Section 107A(a), the Bolar Exemption, which permits use of the drug for generation of clinical data.

In fact, I don’t think NATCO needs the Court’s permission to exercise a statutory right under Section 107A(a). Although Section 107A(a) does not expressly recognize the right of export, the right to “use” may be interpreted broadly to cover export, particularly since the provision recognizes the right to use a patented article for submission of regulatory information even outside India.

We will keep our readers posted on the developments in this case.