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Feb 19

RKD NewsNet February 2019 - Volume II

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

General News

Can A Tenant Utilize The Residence Of A Cinematograph Film Without Any Other License?

- Parag Kamani*

At the outset, let’s define a cinematograph film. It is a visual recording across any medium/platform containing moving images or stills, which may include a sound recording accompanying such visual recording.

The author of a cinematograph film is effectively its producer, as per Section 2(d) (v) of the Copyright Act, 1957. Video films are deemed to be work produced by a process analogous to cinematography.

Copyright in a cinematograph film under Section 14(d) provides the author of a cinematograph film the below listed exclusive rights:

• to make a copy of the film, including a photograph or any image forming part thereof, and storing it in its entirety or any part thereof on any medium/platform by electronic or any other means;

• to sell or to provide on rent, or to offer for sale or for rent, any copy of the film; and

• to communicate the film to the public.

Besides the above rights, copyright protection is also available to the sound track.

The actors or performers in the film are conferred special rights called “Performer's Rights” under Section 38. However, once a performer has, by written agreement, consented to the incorporation of his/her performance in a cinematograph film, he/she shall not, in the absence of any contract to the contrary, object to the enjoyment by the producer of the film of the performer’s right in the same film provided that, notwithstanding anything contained in this sub-section, the performer shall be entitled for royalties in case of the producer utilising such performances for commercial use.

Hence, since a film includes performances by various actors, dancers, and other such/similar artistes/performers, their respective permissions are required to film their performances. This is usually done by contracts being signed by the producer with each performer.

To communicate the film to the public means making the film available for viewing or for being heard or otherwise enjoyed by the public, directly or by any mode of diffusion, regardless of whether any member of the public actually sees, hears, or otherwise enjoys such film. Communication includes communication through satellite or cable or any other means of simultaneous communication to more than one household or place of residence, including residential rooms of any hotel, hostel, hospital, or similar. Communication to a private audience is not included here. What is prohibited is the commercial exploitation of the film without consent of the owner or without the license of the owner of the copyright.

A cinematograph film may also be a recording of a live performance like sport events, public functions, or dramatic or music performances, or it may be based on the cinematograph version of a literary or dramatic work. In the latter cases, if the corresponding literary or dramatic work is copyrighted, the shooting/recording of the film also requires the consent or license of the owner of the copyright in such literary or dramatic work. Similarly, if the film has a sound track recording of music, the producer will need to obtain the consent of the lyricist and the song writer [i.e. composer], if the copyright subsists with them.

Meanwhile, what is the impact of censorship on copyright? Since the subsistence of copyright depends only on the provisions of the Copyright Act, 1957 it would appear that even if the owner has not complied with film censorship requirements, it will not have a bearing on the copyright in the film or the enforcement of remedies against infringement.

Section 52 of the Copyright Act, 1957 does allow screening of movies subject to laws relating to “fair dealing”. However, paradoxically, the Indian Copyright Act does not define the term "fair dealing", and the Honourable Courts have, on several occasions, referred to the landmark English case, ‘Hubbard v Vosper’, on the subject matter.

In effect, though a license from the producer should be sufficient for the usage of the cinematograph film, with the onset of the digital space, rights have been further broken down across mediums/platforms – broadcast, cable, territorial, satellite, video-on-demand, etc. – and, further, so have film rights been divided between the complete film, and the song sequences depicted within the film as against merely sound recordings, which may be available in a physical format or digitally for downloads/streaming purposes. Hence, dependent on the requirement of the “tenant”, several licenses may need to be secured prior to the usage of the entire or even part of the film and, more often than not, it depends upon the facts and circumstances of each case.

 

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

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Story of the ‘Backyard’!

The story began in August, 2011, when Walmart began selling grills under the name “Backyard Grills” and soon applied for a Trademark Registration for the same. However, Variety Stores Inc. acquired the trademark “The Backyard” for services in the field of lawn and garden supplies since the year 1997. At such time the company applied to register the mark with the US Patent and Trademark Office (USPTO), and the same was granted. At a later point after acquiring the mark “The Backyard”, Variety began using the marks “Backyard” and “Backyard BBQ” for selling grills as well. As per the facts of the case, the usage and registration of the mark “Backyard” was known to Walmart during their due diligence however, the same was ignored before launching the grills branded as “Backyard Grills” by Walmart.

Variety Inc. filed an opposition to Walmart’s trademark application and also filed a suit against Walmart at the District Court claiming trademark infringement and unfair competition. The District Court found that Variety was the true proprietor of the registered trademark and that Walmart’s use of “Backyard Grill” is likely to cause confusion amongst the public at large. The District Court ordered Walmart to pay USD32.5 million towards Variety. Walmart appealed.

The Appellate Court raised 3 issues with the registered mark “Backyard” viz. (1) the strength of Variety’s mark, (2) the similarity between the marks to consumers, (3) Walmart’s intent to confuse. The court concluded that the District Court inappropriately rejected Walmart’s survey evidence and improperly weighed the evidence at the District Court. As a result, the Court vacated the grant of summary judgment and the monetary awards and also remanded the case for further proceedings.

In February, 2019, the Court assessed the facts and evidences of the case. The Jury stated that that Walmart's “Backyard Grill” was likely to cause confusion among the public at large with Variety Stores Inc.'s “Backyard” and “Backyard BBQ” trademarks. The Jury further ruled that Walmart willfully infringed on Variety's trademarks. Based on the abovementioned conclusions, the Jury awarded Variety a "reasonable royalty" worth USD 45.5 million and USD 50 million for profits Walmart earned from sales under the infringing trademark, adding up to a total of USD 95.5 million.

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Game of Thrones vs. Game of Stones!

Game of Thrones, an eminent American fantasy TV series watched by millions of people world-wide and across continents has now become a brand in itself. We have all at some point come across the GOT merchandise in the form of T-shits, mugs, bobble heads and even the recent limited edition released by Johnnie Walker, the White Walker - Game of Thrones edition. Additionally the mark ‘GAME OF THRONES’ is a registered mark in class 33, i.e. for alcoholic beverages, as per the records of the UKIPO.

Wadworth & Co. is a popular brewery and has been brewing beer since 1875. The company had applied for the registration of the mark “GAME OF STONES” written in front the Stonehenge as shown in the image below.

1

Recently, Home Box Office commonly known as HBO, a US TV Network lodged an opposition to an application for the mark “GAME OF STONES” filed in class 33 i.e. for alcoholic beverages by Wadworth & Co, for alcoholic beverages on the basis that it is was deceptively similar to the registered mark “GAME OF THRONES”. The opposition that was filed failed on the grounds that the two marks were no considered similar and the applied mark was visually different as it is a device mark (logo) wherein the words “GAME OF STONES” is written below the depiction of the Stonehenge.


1Please note, the image has been used for reference purposes only and we claim no copyright over the image whatsoever.

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Copyright Infringement In Video Games

Video games have been delighting generations right from the 1980’s when Pacman was introduced to the current Nintendo, PS4, Xbox etc. have been reducing the boundaries between virtual and reality through sate of art interfaces. Videogames have become a huge source of income and therefore, protecting their intellectual property is no child’s play.

Recently the United States District Court Southern District of New York passed an order against an infringer who created an infringing program of the famous GTA Vice City2 . One Mr. Perez created an Elusive program (the "Infringing Program") which creates new features and elements in Grand Theft Auto which can be used to harm legitimate players. This Infringing Program allowed users to create unlimited virtual currency for making in-game purchases. This hampered and disturbed the sale of the legitimate virtual currency. The proprietor of the said game, Take-Two Software Inc. (“Take Two”) therefore sought action against the infringer Mr. Perez for direct and contributory copyright infringement, breach of User Agreement and tortious interference with contract.

Take-Two claimed that such infringement irreparably harmed it and if injunction was not granted against Mr. Perez, his infringing conduct will continue harmed the company’s interests. Take-Two lost control over its carefully balanced plan for how its video game was designed for the players. Take-Two's reputation for maintaining its gaming environment, discouraging users from future purchases and gameplay was drastically tampered with by this Infringing Program.

The Court observed that the balance of hardships favors Take-Two. In contrast to the harm that Take- Two will suffer, there is no evidence of any injury against the infringer. It observed that Mr. Perez was liable to Take-Two for wilfully and directly infringing Take-Two's copyrights in GTAV. The Court therefore ordered a permanent injunction against Mr. Perez in the public interest. It also required Mr. Perez to pay Take-Two a sum of $150,000.00 in statutory damages and $66,868 as attorney's fees.


2CASE NO. 1:18-cv-07658 (PKC)

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Take a Bow - Kibow!

Kibow Biotechnology (Kibow) is a US based pharmaceutical company had applied for a patent for one of its product called ‘Renadyl’. The product was granted patent on the basis that it effectively pioneered the use of probiotics for enhancing kidney function and reduces the need for kidney patients to undergo dialysis. Kibow had been granted both a product patent and a process patent in India for Renadyl.

An indigenous company by the name of La Renon Healthcare, based out of Gujarat, sold a similar drug under the name ‘Cudo’ and filed a revocation petition at the IPAB against the patent granted to Kibow. The petition was filed on the grounds that the drug was neither an invention nor an inventive step and that the specification did not disclose any technical advancement over existing knowledge or prior art and was thus obvious to a person skilled in the subject matter. The IPAB rejected La Renon’s arguments regarding the grant of patent, and stated that the innovation is novel and deserves exclusive rights, but it turned down the process patent as the method of composition was found to be obvious and lacked inventiveness. The revocation petition was dismissed.

La Renon then approached the Madras High Court in an appeal against the IPAB order in the form of a writ petition. The High Court evaluated the assertions made by Renon claiming that the patent was granted inappropriately and violated multiple provisions of the Patents Act. However, all such assertions were found to be frivolous by the Hon’ble High Court. Further, the court found no infirmity in the decision given out by the IPAB and thus the writ petition was dismissed without any costs.

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Likelihood Of GST On Trademark And Logo Use By Subsidiaries

Everything business asset or liability has an assigned value and hence, for every business transaction concerning such property, including intellectual property, one is required to pay tax. The tax regulating authorities in the Country are contemplating to levy a GST of 18% on the notional valuation of brands owned by Companies and commonly used by all their subsidiaries. Previously, banks allowed subsidiaries to use their logos and trademarks for free. Trademarks and logos held by parent companies when used by subsidiaries may not be exempted from the scope of GST in the near future. The tax department has now sought to charge a tax of 18% on the deemed value of such transactions.

Where the subsidiaries are using the brands for free, an exact valuation of the trademarks, brands and logos is required to be calculated so that the amount of fees to be paid by the subsidiaries to the parent company for their use can be determined and a GST of 18% can be levied thereon. In cases where the subsidiaries are already paying a fee to the parent company, the tax department shall ascertain if such fees is as per industry standards and that the transactions are at arm’s length.

The trademark, logo, brands for some companies lies with the parent company, for others it lies with the holding company. Some subsidiaries are such that the trademark or logo does not reside in India but in companies outside India. It is important to point out here that different companies will have to deal with this issue in different ways.

According to various experts, under GST there is a supply of brand from the parent company to its subsidiaries which are related parties. It is because of the absence of regulations, which dealt with free supply of services between related parties, in the erstwhile tax regime that this transaction never gained attention.

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Whatman Filter Paper: Filtering Out Counterfeits Way Back From 1992

Whatman International Ltd. (“Whatman”), an American company engaged in the business of manufacturing and selling filtration equipment filed a suit for infringement of trademark, copyright, trade dress, passing off against P. Mehta and others (“Defendants”) at the High Court of Delhi.

Whatman stated that the Defendants (There were 8 Defendants, allegedly related to each other through family or business) had been manufacturing and selling counterfeit products which were deceptively similar to the Whatman filter paper. Whatman stated that not only did the Defendants use its trademarks, but the color combination and get up on the counterfeit products was also similar to that of Whatman’s filter paper i.e. white background with blue script for packing of the filter paper sold under the marks ‘HIRAL’, ‘ACHME’, ‘LABSMAN’, ‘U-CHEM’ and ‘SUN’.

Whatman contented that the Defendants were habitual infringers due to their long history of selling counterfeit filter paper i.e. from 1992 till 2005. Various actions such as were taken against the Defendants which included- lodging complaints in 1992 (after which the Defendants gave undertaking to stop selling the counterfeit filter papers); number of FIRs in the years 1992 and 2005; interim injunction in favour of Whatman in May 2014; and consequently the seizure of impugned filter papers by Local Commissioner from defendant’s premises, etc. However, the Defendants continued to sell the counterfeit filter papers inspite of all these actions and under the names of various entities. Whatman again filed an FIR against the Defendants again in 2018 as a consequence of continuous infringement of its rights by the Defendants which led to the present suit for permanent injunction along with damages was filed.

The Defendants, in opposition to Whatman’s allegations, contended that packaging of filter papers sold by them was in no way identical to that of Whatman’s and the overall look, arrangement and trade dress of defendant’s product was not copied from Whatman.

The Defendants also refuted all other allegations made by Whatman by stating that there was no violation of the injunction order passed by the honorable court in 2014. They claimed that the stock of filter papers found at their premises by the Local Commissioner was an old stock which was 4 years old, as they have not been conducting the business of manufacturing and selling filter papers from the date of injunction order of the court. However, these statements were found to be false since on examination of the concerned stock.

The court observed that the Defendants had made a clear attempt to mislead the court by repeatedly making false statements in court in relation to the said business of filter papers and the relationship/ connections amongst all the Defendants.

The court was of the view that these activities of the Defendants which involved the continued infringement of Whatman’s mark and counterfeiting of the Whatman’s products. Further, inspite of the various court orders and criminal proceedings initiated against them, they continued to carry on the unfair practices which amounted to contempt of court.

The Court observed that if strict action is not taken, orders of Courts would not be complied with by litigants, as is evident in the present case. The illegalities as such as repeated violations and disobedience of the orders and undertakings are deliberate and conscious. The suit was decreed in favour of Whatman and all the Defendants were asked to collectively pay damages to the tune of INR 1 Crore and 35 Lac. The Plaintiff was also to be compensated for the costs incurred by them which included, inter alia, litigation as well, the court fee, official fee of the Commissioners, expenses, legal costs etc. which summed up to around INR 14 Lacs. A decree of delivery up and permanent injunction was, passed against all the Defendants.

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