Export of patented goods in commercial quantity not exempted under S. 107A (Bolar Exemption)

In the matter of Bayer Intellectual Property GMBH v. Titan Laboratories Pvt. Ltd. [CS(COMM) 243/2020], the Delhi High Court, in its ex-parte order dated July 8, 2020, granted an ad-interim injunction restraining the Defendant from exporting the Plaintiff’s patented drug RIVAROXABAN in commercial quantities. The Court ruled that such use will amount to use in India and the Defendant cannot claim exemption under Section 107A of the Patents Act.

Plaintiff’s suit patent for the drug RIVAROXABAN is valid in India till November 11, 2020. Plaintiff filed the suit of patent infringement alleging that the Defendant is exporting the drug RIVAROXABAN in large quantities to Peruvian entities. Plaintiff alleged that at least two shipments of the drug RIVAROXABAN (under brand “MEZOSER-S”) have been exported from India to Peru, and that Peruvian entities have commenced commercial dealing of the drug RIVAROXABAN in Peru. The Plaintiff also submitted that the Defendant was in the business of contract manufacturing and while Defendant’s website lists a product “Rivaroxaban IR Tablets I0/25/20 mg”, it has not yet launched the product in India.

While this was an ex-parte order, the Court did consider the possibility of defence under Section 107A, which provides that the use of a patented invention solely for the purpose reasonably related to the development and submission of information required under any law for the time being in force in India, or in any other country, shall not be considered as infringement of patent rights.

The court, while granting the ad-interim injunction against the Defendant, observed that “…exports have been of finished RIVAROXABAN products and that too in commercial quantities, the defendant primarily is not exempted under Section 107-A of the Patents Act and use of the defendant while exporting will be considered as use in India”.

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

Barcodes as Certification Marks, Published in INTA Bulletin

Author: Siddharth Varshney

ALG Associate Siddharth Varshney reports the Delhi High Court’s Order in GS1 India v. Barcodes SL & Others [CS (Comm 147/2020)], in the INTA Bulletin in his article titled ‘High Court Confirms Barcodes as Certification Trademarks’ – accessible here.

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

Copyright: ALG India Law Offices LLP.

Can e-commerce intermediaries be held liable for sale of counterfeit goods on their platforms?

Author: Siddharth Varshney

Introduction

The rapid technological advancement in the recent past has made a global impact on the functioning of the society, the most prominent of which can be seen in the e-commerce arena. While there has been exponential growth of the e-commerce marketplace, we have also witnessed a rampant rise in sale of counterfeits and pirated goods over such platforms. This issue of counterfeiting and pirated goods has been exacerbated by the COVID-19 pandemic, witnessing an upsurge in the instances exploiting the upsurge in demand on e-commerce platforms. This article explores the extent to which such e-commerce platforms can be made liable and whether they can claim exemption under the safe harbour provision in the Information Technology Act, 2000 (“IT Act”).

Who is an intermediary?

An ‘intermediary’ is defined under Section 2(w) of the IT Act as …any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes”.

Intermediary Liability and the Information Technology Act, 2000

The significant growth of e-commerce in India has brought the issue of intermediary liability to the forefront in India. This issue first came up in Avnish Bajaj v. State of NCT [2005 (79) DRJ 576], where the Delhi High Court quashed the criminal proceedings initiated against the CEO of Bazee.com (now eBay.in). While the proceedings were quashed on procedural grounds, the Court ruled that the website hosting the impugned video can be held liable under the Indian Penal Code and section 67 read with section 85 of the IT Act (which prescribes deemed criminal liability of director(s)/manager(s) of an intermediary entity responsible for publishing or transmitting content containing sexually explicit act).

Following this judgment, the IT Act was amended to introduce the safe harbour provision, i.e., Section 79, Following this judgment, the IT Act was amended to introduce the safe harbour provision, i.e., Section 79, which exempts intermediaries from liability for third-party content made available on its platform.  The intermediary liability for third-party content in India is primarily governed by section 79 of the IT Act read with the Information Technology (Intermediaries Guidelines) Rules, 2011 (“IT Rules”).

Section 79(1) of the IT Act provides intermediaries immunity with respect to any third-party content, data or information hosted by them. However, such immunity is not absolute and is limited by section 79(2) and (3) of the IT Act. Section 79(2) prescribes that such immunity is applicable only when an intermediary’s role is passive and technical in nature. Further, section 79(3)(a) provides that an intermediary cannot claim immunity if it has “…conspired or abetted or aided or induced…in the commission of the unlawful act” and section 79(3)(b) provides for a ‘notice and take down’ regime, wherein an intermediary is required to take down infringing content upon receiving actual knowledge of its existence.

Further, Rule 3 of the IT Rules provides that an intermediary shall observe due diligence, which will absolve them of liability for third-party content. Such due diligence will include publishing its rules and regulations (including user agreement and privacy policy), which shall inform users to not upload any information which is misleading/fake and infringes trademark, patent copyright or any other proprietary rights.

Judicial Developments

In Shreya Singhal v. Union of India [2015 (5) SCC 1], the Supreme Court ruled that when an intermediary receives ‘actual knowledge’ (viz. pursuant to an order of a Court of law) to remove infringing material, it should act on such knowledge and remove the impugned content. The Supreme Court also noted that if intermediaries are required to act on complaints by common public, there will be millions of complaints and it would be difficult for an intermediary to assess them in a limited period of time.

Further, in Myspace Inc v. Super Cassettes Limited [2017 (69) PTC 1 (Del)], the Delhi High Court followed the Supreme Court’s decision in the Shreya Singhal case and ruled that it is necessary to establish the ‘actual knowledge’ on part of the intermediary to establish the liability for unlawful/infringing contents on its website.

In 2018, the Delhi High Court in the matter of Christian Louboutin v. Nakul Bajaj [CS (COMM) 344/2018], differentiated between e-commerce platforms which act just as an intermediary and those which act as an active agent in selling goods. To that extent, the court noted certain criterion to identify the role of e-commerce platform viz. transportation, quality assurance, collection of payment, reviews, authenticity guarantee, advertisement/promotion of the product, membership, providing specific discounts to members, uploading the entry of product, booking ad-space, deep-linking to the trademark’s owner website, etc.

The Delhi High Court observed that “…the so-called safe harbour provisions for intermediaries are meant for promoting genuine businesses which are inactive intermediaries, and not to harass intermediaries in any way, the obligation to observe due diligence, coupled with the intermediary guidelines which provides specifically that such due diligence also requires that the information which is hosted does not violate IP rights, shows that e-commerce platforms which actively conspire, abet or aide, or induce commission of unlawful acts on their website cannot go scot free”.

Similarly, the Delhi High Court later on in the cases of L’Oreal v Brandworld [CS (COMM) 908/2016], Skullcandy Inc v Shri Shyam Telecom & Ors. [CS (COMM) 979/2016], M/s Luxottica Group S. P. A. & Anr. v M/s Mify Solutions Private Limited & Ors. [CS (COMM) 453/2016] applied the criterion laid down in the Christian Louboutin case to determine the liability of e-commerce websites in respective cases.  

Recently, a Division Bench of the Delhi High Court in the case of Amazon Seller Services Pvt. Ltd. vs Modicare Ltd. & Ors. [FAO(OS) 540/2011] further strengthened the safe harbour provided to e-commerce intermediaries by ruling that “…the value-added services provided by them as online market places…do not dilute the safe harbour granted to them under Section 79 of the IT Act. Section 2 (1) (w) of the IT Act does envisage that such intermediaries could provide value-added services to third party sellers.”

To summarize, an e-commerce platform’s role in providing value added services such as packaging of goods, door-to-door delivery, etc. would not disentitle it from seeking the exemption under the safe harbour provision of the IT Act. However, an e-commerce platform’s active involvement in sales such as deep linking to the trademark’s owner website, authenticity guarantee, etc. could lead to revocation of such exemption under the safe harbour provision of the IT Act.

Conclusion

The jurisprudence on intermediary liability of e-commerce platforms continues to evolve and develop, as the courts have focused on striking a balance in granting exemptions and imposing liability on e-commerce platforms. As per the judicial precedents, it is evident that liability of an intermediary depends on its extent of involvement in sale of infringing/counterfeit goods, which needs to be determined on a case to case basis.

The series of judgments by the Delhi High Court ensures that e-commerce platforms cannot hide anymore behind the exemption of section 79 of the IT Act and get away scot free from their liability as infringers or enablers by acting in conduit with the manufacturer(s) of counterfeit products. Hence, if an e-commerce platform has an instrumental role in sale of goods (viz. deep linking trademark owner’s website, authenticity guarantee, etc.) and is just not limited to that of an intermediary and its value added services (viz. packaging, door-to-door delivery, etc.), it will lose its protection as an intermediary under section 79 of the Act.

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

Copyright: ALG India Law Offices LLP.

All trademark and copyright disputes are not non-arbitrable

In the matter of M/S Sagar Ratna Restaurants Pvt. Ltd. v. M/S D S Foods and Ors. [C.S. Comm No. 40 of 2020], the Saket District Court, vide its order dated February 27, 2020, held that all trademark and copyright disputes cannot be non-arbitrable and courts must determine arbitrability on a case-to-case basis.

The instant dispute arose over the Plaintiff’s termination of its franchise agreement with the Defendants, whereby it had licensed its trademark SAGAR RATNA to the Defendants. The Plaintiff claimed that it had rightfully terminated the agreement and had communicated the termination to the Defendants via e-mail. The Plaintiff further submitted that the Defendants continued to use its trademarks even after the termination. Accordingly, the Plaintiff had brought the instant suit seeking a permanent injunction restraining the Defendants from using the SAGAR RATNA marks.

The Defendants submitted that the Plaintiff illegally terminated the agreement and such termination was never communicated to the Defendants. The Defendants further contended that the instant suit was not maintainable as the dispute was to be resolved through arbitration as per the arbitration clause in the franchise agreement. The Plaintiff countered that the nature of the dispute was such that it could not be referred to or settled through arbitration. Therefore, the issue before the Court was whether such trademark disputes are arbitrable.

The Court analysed the jurisprudence and noted that judicial intervention should be very limited and minimal in cases where there is a clear and unambiguous arbitration clause. The Court observed that in the instant case, there is a specific arbitration clause in the franchise agreement and held that the dispute is arbitrable as the relief sought is not an ‘action in rem’ exercisable against the world at large but is an ‘action in personam’ solely against the Defendants. Dismissing the suit and referring the parties to arbitration, the Court noted that “…it is altogether too broad a proposition to accept that no action under the Trade Marks Act or the Copyright Act can ever be referred to arbitration…in the present case, no question arises of those disputes being non arbitrable…plaintiff is seeking a specific particularized relief against a particular defined party i.e. defendants and not against the world at large”.

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

Copyright: ALG India Law Offices LLP.

Plaint can be amended to include a new fact which fundamentally impacts the relief

In the matter of Sony Kabushiki Kaisha v Mahaluxmi Textile Mills [CO No. 3008 of 2011], the Calcutta High Court (Hiranmay Bhattacharyya, J.), vide its judgment dated February 27, 2020, allowed the Plaintiff’s application for amendment of plaint, holding that the fact sought to be included by amendment had a fundamental bearing on the relief claimed in the plaint.

The instant dispute arose on account of the Respondent’s alleged use of the Petitioner’s mark SONY in respect of hosiery products. At the time of filing the suit for permanent injunction restraining the Defendant from using the mark SONY, the Petitioner only claimed passing off, as its trademark application in respect of apparel had not yet been granted by the Registry. Upon attaining registration, the Petitioner filed an application for amendment of plaint to include this fact as well as the cause of action of infringement. The Trial Court rejected the Petitioner’s application on the ground that it would change the nature of the suit, as the Plaintiff was not a registered proprietor at the time of filing the suit.

The Petitioner filed the instant appeal, submitting that the amendment of plaint, if allowed, will not change the nature and character of the suit, which will remain a suit for permanent injunction. It was further submitted that the Petitioner’s registration of the mark needs to be taken on record to grant complete justice in the instant dispute.

The Respondent submitted that the Petitioner wants to incorporate a new cause of action by way of amendment which is not permissible. The Respondant further argued that the registration of the Plaintiff’s mark is not essential in an action for passing off, which is what the suit had been filed for.

The Court while allowing the amendment of plaint observed that “It is well settled that the rights of the parties are normally decided on the date of suit. However, if a fact arising after the institution of the suit has a fundamental impact on the relief which the suitor is entitled to, such events must be taken into consideration to render substantial justice to the parties.”

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

Copyright: ALG India Law Offices LLP.

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