NEWSLETTER OCTOBER 2018 Bulletins Amendments to EU Copyright Directive approved: European Parliament recently approved the amendment to the EU Copyright Directive including the controversial Article 13, which calls upon the online platforms to use “appropriate and proportionate” measures to prevent uploading of infringing copyrighted content. Article 13 essentially mandates all the online platforms to police and filter the content being uploaded on their platforms in real time and make users apply for requisite licenses for uploading copyrighted content. The said EU Copyright Directive will now be placed before the European Parliament for their final approval in January 2019. USITC investigation against Mahindra and Mahindra: United States International Trade Commission (USITC) has recently instituted investigation against Mahindra & Mahindra Ltd. (India) and Mahindra Automotive North America, Inc. (U.S.A.) pursuant to a complaint by Fiat (FCA US LLC). Claiming infringement of its ‘Jeep’ radiator grille by Mahindra’s ROXOR, Fiat has, vide its complaint with USITC, sought an injunction restraining Mahindra from importing any infringing parts or components in the United States. However, Mahindra in its defence has issued a statement wherein it relies upon an agreement with Fiat in 2009, which allegedly grants Mahindra immunity from any claims by Fiat for infringement of their grille, subject to Mahindra using the grille approved by Fiat. Mahindra has also filed a complaint in the Federal Court in Michigan for enforcement of the said agreement with Fiat. Challenge to Sections 31(1)(b) and 31D of the Copyright Act, 1957: Supreme Court of India has admitted a writ petition challenging the constitutionality of Sections 31(1)(b) and 31D of the Copyright Act, 1957. While Section 31(1)(b) empowers the Intellectual Property Appellate Board (IPAB) to grant compulsory licence for works withheld from public on a complaint made by any person when the owner of copyright refuses to allow communication to public on the terms which are considered reasonable by the complainant, Section 31D paves way for statutory licenses for broadcasting of literary and musical works and sound recordings based on payment of royalties in the manner and at rates prescribed by the IPAB. The petitioner, Lahari Recording Company has challenged the abovementioned sections of the Act, 1957, claiming the same to be arbitrary and in violation of Article 14 as well as restraining the rights of copyright owners to exploit their work. The matter is currently pending before the apex court. Fermat Education v. Sorting Hat Technologies P. Ltd. & Ors [CS(OS) 330 of 2018] Madras High Court Madras High Court has in the matter of Fermat Education v. Sorting Hat Technologies P. Ltd. & Ors. extensively relied upon the ‘terms and conditions’ of the online platform run by the Defendant No. 1, Sorting Hat Technologies Pvt Ltd. to dismiss the said defendant’s plea for exemption of liability under Section 79 of the Information Technology Act, 2000 (Act, 2000). Plaintiff, Fermat Education, a partnership firm engaged in providing coaching for CAT (Common Admission Test) for pursuing post graduation in management, had initiated the instant suit against the defendants including, Sorting Hat Technologies Pvt. Ltd. (as operator of the online platform at www.unacademy.com, hereinafter ‘Sorting Hat’) as well as 13 other individuals, providing the infringing content to Sorting Hat, alleging infringement of its copyright in the literary works forming the CAT question bank and also obtained an interim injunction against the defendants. The Hon’ble Court, while deciding upon the defendants’ applications for modification/vacation of the order for interim injunction, rejected Sorting Hat’s submissions claiming ‘intermediary’ status as defined under Section 2(1)(w) of the Act, 2000 and consequently seeking exemption from liability for the infringing content uploaded by third parties on its website. The Hon’ble Court, however, perused the terms and conditions displayed by Sorting Hat on its website at www.unacademy.com, and noted that Sorting Hat offered assistance in creation of user content and also reserved the right to review, approve, reject, edit or modify the user content. Moreover, the said terms and conditions indicated that users could upload the content only after Sorting Hat’s approval and that users would also be paid some consideration by Sorting Hat for provision of the content, as well as restricted the users from uploading or publishing the same user content on any other platform or in any other medium. Accordingly, in view of Sorting Hat’s terms and conditions for providing content for its online platform, the Hon’ble Court held that the same allowed a much wider scope of control as well as involvement in the generation as well as uploading/ publishing of the infringing content on its website www.unacademy.com and refused to interfere with the order of interim injunction. Inter Ikea Systems BV & Anr. v. Sham Murari & Ors. [CS(COMM)104/2018] Delhi High Court Recently, in the matter of Inter Ikea Systems BV & Anr. v. Sham Murari & Ors., the Hon’ble Delhi High Court has, in view of the defendants’ attempt of misleading the Trade Marks Registry by filing an affidavit with incorrect information, in addition to granting permanent injunction, also awarded damages and exemplary costs against the defendants. Plaintiffs, Inter Ikea Systems BV – a Netherland based manufacturer and supplier of home furnishing products along with its Indian subsidiary had in December 2014, initiated a suit for injunction and damages against the defendants for infringement of their registered trademark IKEA by using the domain name www.ikeaindustries.com and operating under a partnership firm named Ikea Industries for automotive parts. While the Hon’ble court had passed a preliminary decree granting permanent injunction against the defendants, the matter was pending in respect of rendition of accounts, delivery up and damages. Addressing the issue of computation of damages, while the defendants claimed to have not sold any product by the firm Ikea Industries till December 2014, the Plaintiffs relied upon and brought to the Hon’ble Court’s attention, the contrary details submitted by the defendants before the Trade Mark Registry in support of their application for registration of the trademark IKEA in their favour, wherein the defendants had claimed use of the mark IKEA since 2010 and claimed sales turnover of over one crore for each financial year of 2010 – 11, 2011 – 12, 2012 – 13. In this regard, the Hon’ble Court also recorded the Defendant’s statement wherein he specifically denied the user details submitted with the Trade Marks Registry as incorrect and claimed the sales turnover to be of their erstwhile enterprise and not Ikea Industries. Accordingly, considering the documents placed on record including the inventory prepared by the Local Commissioner of the goods manufactured by the defendants, and relying upon the test for computation of damages using ‘rough and ready calculation’ laid down by the Division Bench in Hindustan Unilever Limited v. Reckitt Benckiser India Limited ILR(2014)II Delhi 1288, the Hon’ble Court awarded damages based on the profit that could’ve been made by the defendants. Further, while addressing the Plaintiffs’ prayer for punitive damages, the Hon’ble Court reiterated the test of aggravated or punitive damages established by the House of Lords in Rookes v. Barnard [1964] 1 All E.R. 367 and Cassell & Co. Ltd. v. Broome, 1972 AC 1027, and observed that the present case was not a case for award to punitive damages. Nonetheless, emphasising on the dishonest adoption of the mark IKEA by the defendant as well as submitting a false affidavit and misleading the Trade Mark Registry, the Hon’ble Court ruled that the defendants’ conduct called for exemplary costs and accordingly held the defendants liable for a cost of INR 10 Lakhs, to be equally split between the Plaintiffs and the Controller General of Patents, Designs and Trade Marks. Burger King Corporation v. Techchand Shewakramani & Ors, CS(Comm) 919 of 2016 and CS(Comm) 122 of 2017, Delhi High Court The Hon’ble Delhi High Court recently clarified the scope of the term “use of the mark” as explained under Section 2(2)(c) of the Trade Mark Act, 1999 (Act, 1999) as well as the territorial jurisdiction under Section 20 of the Code of Civil Procedure (CPC) in trademark and copyright infringement cases. The Plaintiff, Burger King Corporation, a U.S. based company had filed a suit before the Delhi High Court seeking permanent injunction against the defendants restraining infringement and passing off in respect of their trademarks ‘Burger King’ and ‘Hungry Jacks’ as well as damages inter alia. However, the defendants, being individuals as well as private companies based out of Mumbai, Maharashtra, had filed applications under Order 7 Rules 10 & 11 of the CPC, claiming lack of cause of action in Delhi as well as territorial jurisdiction. The defendants argued lack of cause of action in Delhi in view of absence of any sale by the defendants in Delhi and relied upon the settled law laid down in Indian Performing Rights Society Ltd. v. Sanjay Dalia, 2015 (63) PCT 1 (hereinafter IPRS v. Sanjay Dalia) and Ultra Home Construction Pvt Ltd v. Purshottam Kumar Chaubey & Ors, 227 (2016) DLT 320 (DB) (hereinafter Ultra Home) to emphasise the lack of territorial jurisdiction under Section 134 of the Act, 1999. It further submitted that events subsequent to filing of the suit could not be taken into consideration for the purpose of establishing jurisdiction. Whereas, the Plaintiff relied upon the various documents on record, including the extracts from defendants’ website at ‘www.theburgerking.in’ calling for franchisee proposals for upcoming street carts in Delhi inter alia, clearly evincing the defendants’ expansion plans in Delhi to establish accrual of cause of action in Delhi as required under the Section 20 of the CPC. The Hon’ble Court, while agreeing with the Plaintiff’s submissions and in view of the documents on record, including the various franchise agreements submitted by the Defendants themselves, held that the Plaintiff had successfully established a credible and eminent threat of the defendants launching Burger King carts and outlets in Delhi and opined that “it is would be too stringent a test to hold that unless an outlet is set up, there would be no jurisdiction”. The Delhi High Court, also clarified that IPRS v. Sanjay Dalia andUltra Home  deal with instances where jurisdiction is claimed only on the basis of Section 134 of the Act, 1999 and /or Section 62 of the Copyright Act, 1957 (Act, 1957), whereas the “provisions of Section 134 of the Trademarks Act, 1999 and Section 62 of the Copyright Act, 1957 are in addition to  and not in exclusion of Section 20 of the CPC”; and in case, a plaintiff could make out a cause of action within the territory of the court under Section 20 of CPC, reference to Section 134 of Act, 1999 and/or Section 62 of Act, 1957 need not be made. As regards the cause of action, the Delhi High Court relied upon ‘use’ of a mark as explained in Section 2(2)(c) of the Act, 1999 and held that advertisement and promotion of one’s business under the mark in a territory, including inviting franchisee queries and sourcing goods from a particular territory, manufacturing and/or assembling goods in a particular territory as well as printing of packaging in or exporting goods from a particular territory would constitute ‘use of a mark’ and consequentially, constitute a cause of action under Section 20(c) of the CPC in a trademark infringement and passing off action. Further, drawing from the Supreme Court’s decision in Laxmikant V. Patel v. Chetanbhat Shah & Ors, AIR 2002 SC 275, the Hon’ble Court opined that the concept of infringement and passing off is not fixed in time and therefore, in suits for infringement and passing off, basing of the jurisdiction only as per the date of the plaint would not be a correct approach. Accordingly, in view of the defendants’ promotion and open expression of their intention to expand the business under the mark Burger King across the country, including Delhi as well as seeking and entertaining franchisee requests from the territory of Delhi, the Hon’ble Court refused the defendants’ contentions for lack of cause of action in Delhi and dismissed their instant applications.   Glenmark Pharmaceuticals Ltd. v. Curetech Skincare & Anr., COMIP (L) No. 1063 of 2018, Bombay High Court In one of the rare instances, the Bombay High Court has in the matter of Glenmark Pharmaceuticals Ltd. v. Curetech Skincare & Anr. ordered costs to the tune of INR 1,50,00,000 (One crore and fifty lakhs) against the defendants in a suit for trademark infringement. Plaintiff, Glenmark Pharmaceuticals had initiated legal proceedings against the defendants for infringing their registered trademark CANDID by manufacturing and selling products under the impugned mark CLODID. The defendants, appearing before the Bombay High Court, stated that the adoption of impugned mark by them was a mistake and expressed willingness to submit to a decree. The Plaintiff however, submitted that the defendants were habitual infringers, repeatedly engaged in infringing the trademark rights of numerous pharmaceutical companies and should not be allowed to go scot free. Plaintiff further stated that the defendant also has various other infringement proceedings pending against it in different jurisdictions, wherein most of the plaintiff pharma companies have also secured interim injunctions against the defendants; in-fact, the Delhi High Court has in Win-Medicare Pvt Ltd v. Galpha Laboratories Ltd & Ors categorically observed the defendant to be a habitual infringer. Additionally, emphasising upon the sensitive nature of medicines manufactured by the parties and the responsibility associated therewith, the Plaintiff also submitted various news reports as well as official documents by Central Drugs Standard Control Organisation (CDSCO) and the FDA expressly indicating some of the defendants’ products to be of sub-standard quality and in violation of the FDA regulations. Accordingly, considering the Plaintiff’s submissions as well as the information/documents presented before the Court, the Bombay High Court observed that the defendants’ conduct was not only dishonest but also audacious and in complete disregard to the rule of law. The Hon’ble Court therefore, awarded costs of INR 1,50,00,000 in favour of the plaintiff and also directed the defendants to give an undertaking to withdraw and destroy all the products bearing the impugned mark, apply for cancellation of manufacturing permission for the products under the impugned mark and to conduct its business in strict compliance of the FDA rules and regulations inter alia.   Disclaimer This newsletter is intended for general information and education purposes only and the material content herein does not constitute legal or other professional advice. If you wish to learn more about the information published herein or unsubscribe to this newsletter, kindly write to info@beruar.com or Beruar & Beruar, D-155, Third floor, Defence Colony, New Delhi 110024. Beruar & Beruar LLP D-155, Third Floor, Defence Colony, New Delhi - 110 024 | T: +91 11 41079789, 41556787 | E: info@beruar.com www.beruar.com Offices: DELHI | MUMBAI | RANCHI © Beruar & Beruar, 2018