Feb 19

RKD NewsNet February 2019

Compiled by: Adv. Sachi Kapoor & Adv. Aboli Kherde | Concept & Edited by: Dr. Mohan Dewan

India jumps from rank 44 to rank 36 on the International IP Index-2019

The US Chamber of Commerce’s Global Innovation Policy Center releases the International Intellectual Property (IP) Index every year. We are proud and delighted to report that India has ascended eight places on the International Intellectual Property (IP) Index this year. Our Country has the highest gain for any country on the Index as it has shot upto the 36th position. The Index assesses the Intellectual Property regimes and developments in 50 global economies. While, the US, the UK, Sweden, France and Germany hold the top 5 positions since the last 2 years, India’s progress on the Index list from rank 44th in 2018 to rank 36th this year is the highest among all the 50 participating nations mapped by the Index.

There are around 45 parameters/ indicators based on innovativeness and the national IP climate which are critically analysed for ranking a country on the Index. It has been reported that India’s overall score has increased substantially from 30.07% (12.03 out of 40) in the 6th edition to 36.04% (16.22 out of 45) in the 7th edition.

India’s accession to the WIPO Internet Treaties, the agreement to initiate a Patent Prosecution Highway (PPH) with international offices, providing IP incentives through governments programs such as Startup101, Make in India, etc. for budding business and its efforts towards streamlining and digitizing the IP filing and prosecution process has reflected in this rank jump that we should all be proud of.

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Endorsements by Celebrities and their liability towards consumers

When art is without an ulterior intent, it is pure; it is respected and not judged according to any societal parameters. But for this, the Art itself has to be untouched by any motive other than expression.

Can advertisements and endorsements by celebrities be considered as pure art forms? No. That is because, the intent behind advertisements and promotional activities is not only to put forth an artistic expression, but is predominantly biased towards driving the consumer base towards the product/ service being endorsed. And hence the social immunity that art-forms enjoy (or rather should enjoy) is not always applicable to these promotional activities.

Based on this premise, we come to the Consumer Protection Bill, 2018 which was recently passed by the Lok Sabha and is now pending with the Rajya Sabha. This Bill seeks to wholly replace the Consumer Protection Act, 1986.

The Bill is revolutionary since it will be changing and modifying the Indian market place in various ways. A considerable amount of liability is imposed upon various entities in the trade chain such as the manufacturer, packager, endorser etc. Such legislation is a welcome change against misleading advertisements and unfair trade practices. The issue of consumers being left helpless in cases of deficient services or defective goods has reached its peak now, and a cogent mechanism for redressal of the complaints of such distressed consumers shall certainly be in interest of the general public.

One very important aspect that the Bill addresses is the liability of the endorser of brands in case the consumer suffers an injury due to defective goods or services. It imposes a penalty of up to INR 10 lakh on a manufacturer or an endorser for false and misleading advertisements. For a subsequent offence, the fine may extend up to INR 50 lakh. The endorser of a misleading advertisement can also be prohibited from endorsing any particular product or service for a period of up to 1 year. For every subsequent offence, the period of prohibition may extend to 3 years. However, if the endorser has exercised due diligence to verify the veracity of the claims made in the advertisement, he shall not be liable to the penalties under the law.

A lot of debate has gone around the film fraternity as well as the legal fraternity, as to whether the liability imposed on celebrities is valid? Morality is as subjective as a person, and hence whether the celebrity is morally liable or not is a ‘to each his own’ statement. However, the imposition of liability on the endorser is not full-proof and is prone to various loopholes when it comes to enforcement. For instance, how is the celebrity to identify and ascertain the contents of the products? How can a fresh-out of- a- high class- parlour celebrity be expected to know the effects (or side effects) of a Rs. 120 worth Kajal? Let us go a step further and assume that the celebrity is aware of such details of the products/ services, the question as to how that particular product was harmful specifically for the consumers still remains unanswered. This further widens the scope of loop holes in the present legal scenario when it comes down to enforcement of such laws.

The role that an endorser plays in the product promotion can settle the debate a little more. The role of the endorser is limited to attracting attention before saying what the brand-owner has got to say. He/ She basically acts as a speakerphone to the brand’s voice- making it louder and its reach wider.

The other side of the coin is the endorser’s personal ethical responsibility. The religious fan following that India gives to its celebrities, whether they are film stars, cricketers, etc. imposes a tinge of responsibility (if not more) on these celebrities to watch what they say rather than act merely as a carriers of information. Especially when their fan following is prone to mental and physical health hazards.

Nevertheless, such a responsibility, though can be imposed on the ‘morals’ that the celebrity endorses, the same cannot be imposed for the defects in the products he/ she endorses for reasons of practicality stated hereinabove. That would be like killing the messenger. No?!

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Enforceability of Non-Compete

Non-Compete Clauses have been an integral and vital part of employment agreements in order to protect the intellectual property, reputation and goodwill of the organization in today’s highly competitive market. Recently, a Television News Channel (“News Channel”) filed a suit against its News Broadcaster, restraining her from taking up similar work with any other television channel until the expiry of the term of her Employment Agreement; from allowing her name, image or voice to be associated with any other news channel during such term; and for recovery of damages worth INR 2,00,10,000.

The News Channel claimed to have spent large sums of money and resources in grooming the Broadcaster and in building her image as one of the prominent faces of the News Channel since the last 14 years. However, the Court observed that the proprietary rights over the skill and excellence acquired by the Broadcaster over the years cannot be vested in the News Channel merely because it contributed or facilitated the same.

As per the Employment Agreement, only the News Channel had the right to terminate it. This right had not been provided to the Broadcaster except for medical reasons. The term of the Agreement was 3 years after which it was renewed for another 3 years and so on. However, before the expiry of such period, the Broadcaster communicated her intention to terminate the agreement. The News Channel learnt that the Broadcaster intended to join a competing news channel and hence filed this suit. A negative covenant in the contract between the parties, restrained the Broadcaster from joining / serving any other news channel till the last date of the term of the agreement with the News Channel. The News Channel invoked this provision to restrain the Broadcaster. However, the Court observed that since the Employment Agreement between the parties was terminated, the Broadcaster cannot be restricted from entering into another agreement. It stated that such a restriction would be viable only until the employment agreement is continuing. It held that if the interim restriction is granted, the Broadcaster would remain idle.

The News Channel also stated that it shall continue to pay the Broadcaster the emoluments as per the Agreement, if she agreed not to associate with any competing news channel. It further narrowed down the negative covenant by allowing her to engage in back stage activities other than of being the news presenter/face of the channel. The Court did not allow this stating that ‘benching a professional for as long as 10 to 11 months can be devastating, capable of inflicting permanent damage affecting mental and physical health and future prospects of a professional.’

The Court’s assessment of the balance of conveniences, before passing an interim order, is apparent in this case. It observed that not allowing the Broadcaster to work on screen would adversely affect her goodwill and presence in the market and such loss cannot be monetarily compensated if an interim injunction is passed against her. The Court observed that neither the element of irreparable injury, nor that of balance of convenience, (both of which are requisites of granting an interim relief) are in favour of the News Channel and hence dismissed the application for interim injunction.

The matter is listed in July 2019 for framing of issues, if any. Watch this space for updates!

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Nike did it: Wins permanent injunction against infringers!

Nike sought a permanent injunction against unauthorised usage of its registered trademark "NIKE and its “SWOOSH DEVICE" in the case of Nike Innovate C.V. v. Hina Imported Shoes and Ors. at the Delhi District Court.

Nike, one of the most famous sports footwear brands in the world, boasts a world-wide market with its presence in more than 160 countries all over the globe. Nike adopted the marks 'NIKE’ and/or ‘SWOOSH DEVICE’ and/or ‘FLYKNIT’ and/or ‘FLYKNIT’ since 1978. The defendants, in this case were engaged in the business of manufacturing, distribution and sale of readymade garments and footwear at Palika Bazar, New Delhi. Nike alleged that the defendant were dishonestly using Nike’s trade mark causing huge losses both in business and reputation which cannot be compensated in terms of money. Nike sought permanent injunction against the defendants for infringement of its trade marks. A local commissioner was appointed to obtain and preserve the infringing goods obtained from the defendants as a result of inspection. This inspection revealed that the the goods seized were carrying Nike’s logo and mark.

As the defendant failed to appear and the photographs filed by LC in order to show that the goods seized were carrying the logo and mark of Nike, the Court held that a case against the defendants had been proven.

The Court further held that Nike was entitled to decree of permanent injunction restraining defendant from using, selling, soliciting, dealing with or disposing of the merchandise etc. of impugned goods containing NIKE’s trademarks. The Court also passed decrees for delivery of stock of goods comprising Nike’s marks and for the seized goods to be handed over to Nike. Damages were not awarded since no proof regarding rendition of accounts or damages was filed.

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Mother dairy files Suit for Infringement against Narmul Mother Dairy

We are all familiar with the famous processed milk and groceries brand “Mother Dairy”. Mother Dairy Fruit And Vegetable Private Ltd. (“Mother Dairy”) recently filed a suit for trademark infringement against one of the entities that processed milk and milk products to be sold under its brand. One Nalgonda Rangareddy District Milk Producers Mutually Aided Cooperative Union Ltd. (“Union”) agreed to exclusively process, package and supply milk to be marketed under the trademark “Mother Dairy”. The two parties first entered into a Collaboration Agreement; later when disputes arose, they entered into a Settlement Agreement. Mother Dairy has protected its IP rights in its brands and logos by obtaining trade mark and copyright registrations for the same.

Vide this Settlement Agreement, it was agreed that the Union shall not claim any right in Mother Dairy’s trademarks, but was permitted to use the words "Mother Dairy" on the labels for sale of its milk and milk products. Thereafter, a second Collaboration Agreement was executed between the parties for a period of 5 years. Upon expiry of the said term, Mother Dairy sent legal notices to the Union asking it to stop using the trademark “Mother Dairy” and to terminate the Settlement Agreement. Mother Dairy also filed a suit of trademark infringement against the Union stating that by continuing to use the trademark even after termination of the Collaboration Agreement, the Union was violating Mother Dairy’s rights in the trademark and thereby causing confusion in the minds of the consumers.

The Union had been selling its products under this trademark since 1992 and using this trademark in all its communications, advertisements, packaging and other promotional material in Andhra Pradesh. The provisions of the Settlement Agreement permitted it to use the mark/ Logo “Narmul Mother Dairy”. It had withdrawn its application for registration of its logo "Mother Dairy Narmul" and agreed not to oppose the registration of the modified labels as and when registration was sought by Mother Dairy pursuant to the Settlement Agreement only.

Mother Dairy argued that following the expiry of the Collaboration Agreement the Union had no right whatsoever to continue its use of the trademark, even in accordance with the Settlement Agreement.

Pursuant to this, when Mother Dairy had applied for injunction against the Union, the Court recorded that the Union shall comply with the terms of the Settlement Agreement. The present case was an appeal in the High Court of Delhi against this order. Here, the Court held that pending the final adjudication of the suit, parties ought to be governed by their rights under the Settlement Agreement.

The Court observed that the Settlement Agreement specifically permits the Union to use the words “Mother Dairy”, therefore the fact that Collaboration Agreement provided for the Union’s product to be marketed by under Mother Dairy’s marks does not per se extinguish the rights of the appellant under the Settlement Agreement.

The Court ordered that pending the final adjudication of the suit, parties ought to be governed by their rights under the Settlement Agreement, which it stated, was the effect of the ad interim order by the learned Single Judge. No order as to costs was made.

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Moral rights of artistes...boon or bane?

- Adv. Parag Kamani*

Every creator of work (“author”) gives rise to moral rights, which are personal rights that are recognized in civil law jurisdictions.

Simplistically speaking, moral rights create recognition when the creator’s work is used, and the manner in which such work is treated and/or depicted.

Moral rights have been explained under Section 57 of the Copyright Act, 1957. Originally, the section focused on literary works, initially resulting in authors of “other” works with nothing to safeguard themselves with. However, following a judgment in 1987, the Honourable Courts widened the scope of Section 57 to include authors of other works as well. Hence, moral rights since apply and protect original literary, dramatic, musical and artistic works, cinematograph films, and sound recordings from unauthorized uses. The relevant portion of the Act is reproduced below –

Author’s special rights — (1) Independently of the author’s copyright and, even after the assignment either wholly or partially of the said copyright, the author of a work shall have the right—

(a) to claim authorship of the work; and

(b) to restrain or claim damages in respect of any distortion, mutilation, modification or other act in relation to the said work if such distortion, mutilation, modification or other act would be prejudicial to his honour or reputation.

Effectively, as per my reading of Section 57 of the Act, it defines four basic “moral rights” of an author/creator. These are:

i. Right of attribution, also called the right of paternity.

ii. Right of integrity.

iii. Right of having the work/creation published anonymously or pseudonymously.

iv. Right of not having the work falsely attributed to the creator.

Moral rights require that the creator’s name is always shown with their work. This is called right of attribution/paternity. This refers to a right of an author/creator to claim authorship of work and a right to prevent all others from claiming authorship of their work.

Moral rights also require that the creator’s work is not treated in any way that hurts the creator’s reputation. This is called right of integrity. The preserving of the integrity of the work allows the creator to object to alteration, distortion, or mutilation of the work that is prejudicial to the creator's honour or reputation.

Without prejudice to the rights conferred on authors, a performer’s right is an exclusive right subject to the provisions of the Copyright Act, 1957. However, it is hereby clarified that the mere removal of any portion of a performance for the purpose of editing, or to fit the recording within a limited duration, or any other modification required for purely technical reasons, shall not be deemed to be prejudicial to the performer’s reputation.

Moral rights are rights that the creator of a work is automatically entitled to at the time of creation, and which no one else can claim. Moral rights exist alongside copyright in certain types of work. Generally, moral rights remain with the creator of a work or pass to the creator’s estate on death. Unlike copyright, moral rights cannot be assigned (legally transferred). Even if an artiste has assigned his or her copyright rights to a work to a third party, he or she still maintains the moral rights to the work. However, these are frequently waived and, hence, it remains moot for artistes whether moral rights are a boon or a bane.


(*The author has been part of the global Media & Entertainment industry for 30 years.)

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URI Shoots copyright trouble before release

Much has been said in this edition about films and media. Then why leave out the latest blockbuster!! Court disputes before film releases are now a common PR activity. The recently released Uri: The Surgical Strike is no different. A case of copyright infringement was filed against the makers of Uri. The Author of the book: Protecting India: the Modi Way, Mr. Nitin Gokhale stated that the film had copied and derived substantially from his book. He filed a complaint at the Delhi High Court stating that the film’s release be stalled until the copyright case is resolved. On the other hand, the film-makers defended themselves stating that a lot of information about the Surgical Strike was already available in the public domain. They also stated that ideas/information already in public domain cannot be protected by copyright. The Court had asked the author and the film-makers to settle the matter outside court. The amount of settlement has not been made public; however, the parties have settled the issue.

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