Ad interim injunction granted against satire web portal in Budweiser infringement and disparagement case

In the matter of Anhueser Busch Llc vs Rishav Sharma & Ors [IAs 6320/2020, 6321/2020, 6322/2020 & 6323/2020 in CS(COMM) 288/2020], the Delhi High Court, vide its order dated July 30, 2020, granted an ad interim injunction restraining the Defendants from, inter alia, broadcasting the alleged fake news of the Plaintiff’s employees urinating in its ‘Budweiser’ beer.

Defendant Nos. 1, 2 and 3 (“Defendants”) are the alleged proprietors of the website www.thefauxy.com. The Plaintiff argued that the Defendants’ posts (which include a short video) on social media, such as YouTube (Defendant No. 4) and Twitter (Defendant No. 5), perpetrated fake news stating that the Plaintiff’s employees have been urinating in its ‘Budweiser’ beer sold to the customers. The Defendants’ social media posts, as per the Plaintiff, contain no disclaimer that such news is fake or fictitious.

Alleging trademark infringement and disparagement, the Plaintiff submitted that the aforesaid video became viral and resulted in several defamatory posts across social media. Further, the Plaintiff submitted that a few publications even reported the fictitious news as being a legitimate fact. The Plaintiff contended that the Defendants have knowingly and with malice published the defamatory posts to propagate the fictitious/fake news of the Plaintiff’s employees urinating in the Budweiser beer sold to the customers.

Observing that the Plaintiff has made out a prima-facie case and established the balance of convenience in its favour, the Court held “… it is directed that the defendant Nos. 1, 2 and 3 defendant Nos. 1, 2 and 3, their partners, agents, assigns, officers, servants, affiliated entities, as the case may be, and all others acting for and on their behalf are restrained from reproducing, broadcasting, communicating to the public, screening, publishing and distributing the impugned video or any other video on any media or platform and promoting the impugned video on various social media amounting to infringement of plaintiff’s registered mark ‘Budweiser’ and also amounting to commercial disparagement of the plaintiff’s products including but not limited to the video / post published on the following four URLs till the next date of hearing….”.

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.

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Arbitrability of Intellectual Property Disputes in India

In India, arbitration proceedings are regulated under the Arbitration and Conciliation Act, 1996 (“the Act”). While the Act does not exclude any category of disputes treating them as non-arbitrable, it is well-established that only those disputes are arbitrable which involve rights exercisable against specific individuals, viz. “rights in personam” and which do not arise out of special statutes conferring jurisdiction on specific courts [Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. and Ors., AIR 2011 SC 2507]. In case of disputes involving rights exercisable against the world at large, viz. “rights in rem”, the parties are ousted from choosing a private forum and must submit to the courts. However, in Booz Allen, the Supreme Court did clarify that this is not a rigid rule and that disputes relating to sub-ordinate rights in personam arising from rights in rem have always been considered to be arbitrable.

Judicial precedents on arbitrability of IP disputes

In A. Ayyasamy v. A. Paramasivam & Ors. [(2016) 10 SCC 386], the Supreme Court listed intellectual property disputes (“IP disputes”) in the list of non-arbitrable subject matter.

While the Supreme Court’s observation in Ayyasamy with respect to non-arbitrability of IP disputes was only obiter dictum, the Bombay High Court solidified this position in Steel Authority of India Ltd. v. SKS Ispat & Power Ltd. & Ors. [Notice of Motion (L) No. 2097 of 2014 in Suit No. 673 of 2014], holding that “…the rights to a trademark and remedies in connection therewith are matters in rem and by their very nature not amenable to the jurisdiction of a private forum chosen by the parties…”.

However, in Eros International Media Limited v. Telemax Links India Pvt. Limited [2016 (6) BomCR 321], the Bombay High Court, while discussing disputes pertaining to infringement and passing off actions, took a different view and observed that “As between two claimants to a copyright or a trade mark in either infringement or passing off action, that action and that remedy can only ever be an action in personam…In trade mark law it is true that the registration of a mark gives the registrant a right against the world at large. It is possible that an opposition to such an application (before the Registrar) would be an action in rem, for it would result in either the grant or non grant of the registration, good against the world at large. But an infringement or passing off action binds only the parties to it… this applies equally to copyright actions…”. Particularly, referring to the cases wherein IP disputes arise out of contracts, the Court held “Where there are matters of commercial disputes and parties have consciously decided to refer these disputes arising from that contract to a private forum, no question arises of those disputes being non-arbitrable. Such actions are always actions in personam, one party seeking a specific particularized relief against a particular defined party, not against the world at large”.

Thereafter, the Bombay High Court in Deepak Thorat S/o Dinkar Thorat v. Vidli Restaurant Ltd. [2017 SCC online Bom 7704] reiterated its observation in the Eros case and held that “…questions of deceptive similarity, etc. which are usually part of an infringement or passing of action…are pure findings of fact. There is no reason why an arbitrator cannot go into or consider those questions. After all, such consideration is for determining whether there is any breach of a negative covenant agreed to between the parties. Neither is an order that is passed on such consideration an order in rem nor is the right to claim such order sourced in a right in rem such as the one which a registered proprietor of a trade mark or an owner of a mark…has vis-a-vis the mark…”.

In the most recent judgment on this aspect, viz. 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 held that all trademark and copyright disputes cannot be non-arbitrable, and that the dispute at hand was arbitrable as the relief sought was not an ‘action in rem’ but is an ‘action in personam’ solely against the Defendants.

Conclusion

As per the judicial precedents, it is evident that there is no absolute bar on arbitrability of IP disputes in India. While IP disputes pertaining to validity and ownership of the IP are considered to be non-arbitrable, IP disputes in the nature of infringement and passing off actions have been held to be arbitrable, especially when arising out of a contract between the parties which includes a clear arbitration clause. The position can be further clarified with legislative provisions and continued evolution of Indian jurisprudence on this aspect.

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.

No rights in a plant variety until grant of registration

In the matter of Sungro Seeds Ltd v. SK Tripathi & Ors., [CS (OS) No. 1163 of 2013], the Delhi High Court, vide its Order dated May 15, 2020, dismissed the Plaintiff’s suit and held that no cause of action would accrue on the basis of breeder’s rights until Plaintiff obtains a registration for its plant variety under Protection of Plant Varieties and Farmers’ Rights Act, 2001 (“PPVFR” Act).

The Plaintiff developed a hybrid variety of Cauliflower under the name ‘Katreena’. The Plaintiff came across the Defendant No. 3’s hybrid cauliflower seeds under the name ‘Riya’. The Plaintiff submitted that it conducted tests which disclosed that the seeds of the Defendant had 100% identical characteristic features as that of the Plaintiff’s hybrid variety. The Plaintiff argued that the Defendant had illegally acquired Plaintiff’s confidential information relating to breeding from its ex-employees (Defendant Nos. 1 and 2) and knowingly misappropriated its trade secret. Accordingly, the Plaintiff instituted the instant suit seeking permanent injunctions against the Defendants, restraining them from using or disclosing any of the confidential information related to Plaintiff’s breeding strategies.

The Defendant filed an application for rejection of the plaint on the ground that both the Plaintiff’s and Defendant’s applications for registration of their respective plant varieties are pending before the Registrar under the PPVFR Act and the issue of breeder’s rights is yet to be resolved. The Defendant argued that the instant suit could have been initiated by the Plaintiff only if its plant variety was registered and the breeder’s rights had been conferred upon it.

The Court perused the arguments made by both parties and held that “…the plaintiff, prior to obtaining registration under the PPVFR Act, cannot maintain a suit to restrain the defendants from infringing the rights which are yet to be conferred on the plaintiff on grant of registration…the plaintiff is not found to be having any rights, asserting which the suit was filed and the suit is dismissed”.

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.

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Defence of statutory acquiescence unavailable against a registered trade mark

In the trademark infringement suit GSK Consumer Healthcare S.A v. EG Pharmaceuticals & Ors., IA No. 6749/2019 in CS (Comm) No. 238/2019, a Single Judge (R.S. Endlaw, J.) of the Delhi High Court vide his order dated October 31, 2019 while granting the interlocutory application (for interim injunction) has clarified that the defence of acquiescence under Section 33(1) of the Trade Marks Act, 1999 is not available against the proprietor of a registered trade mark. The Court has held that a registered proprietor cannot be non-suited by a defence of statutory acquiescence since such a defense is available only in a passing off action by an unregistered mark.

The Plaintiff instituted a suit against the Defendants to restrain them from infringing its registered trade mark OTRIVIN through adoption and use of BIOTRIVIN for identical goods by the Defendants. The Plaintiff claimed that its product was launched in the year 1956 in Finland and the earliest launch of its product in India can be traced back to the 1980s. The Plaintiff submitted that the predecessor-in-interest of the Plaintiff became aware of the mark BIOTRIVIN filed for registration by Defendant No. 3 when it was advertised (for opposition in the Trade Marks Journal) on July 1, 2007. The Plaintiff stated that while an opposition was filed against the Defendant’s trade mark application, it was dismissed as time-barred, and subsequently the application proceeded to registration. The Plaintiff submitted that it came across the Defendant’s product on online pharmacies in April 2019 pursuant to which it instituted the present suit.

A Written Statement was filed only by Defendant No. 2. The joinder of Defendant No. 1 to the suit was challenged on the ground that the latter is not concerned with the subject dispute since it is merely a manufacturer of the product under the trade mark of the Defendant No. 2. No interlocutory application was, however, filed by Defendant No.1 seeking deletion of Defendant No. 1. The joinder of Defendant No. 3 was also pointed out as being bad on the ground that it was dissolved and merged with the Defendant No. 2 vide order dated March 15, 2017 of National Company Law Tribunal, Ahmedabad. Formal deletion of Defendant No. 3 was also not sought though. 

Defendant No. 2 contended that it had been using the mark BIOTRIVIN since 2007. They further contended that the Plaintiff is aware of the manufacturing license granted to the Defendant in 2007 which was subsequently renewed in July 2012. The Defendant went on to contend that its products under the mark BIOTRIVIN are sold in the market since 2008 which is within the knowledge of the Plaintiff. Relying on this, the Defendant contended that there has been statutory acquiescence on the part of the Plaintiff so its prima facie case for an interim injunction is weak.

For ease of reference, the relevant portion of Section 33(1) of the Trade Marks Act, 1999 has been extracted below:

Section 33. Effect of acquiescence – (1) Where the proprietor of an earlier trade mark has acquiesced for a continuous period of five years in the use of a registered trade mark, being aware of that use, he shall no longer be entitled on the basis of that earlier trade mark—.”

While analysing the availability of the defence of acquiescence under Section 33(1) against a ‘registered’ proprietor of a trade mark, the Court elaborated on how the statute distinguishes between a proprietor and a registered proprietor. The Court, in this regard, held that – “Section 33 refers to the proprietor of an earlier trade mark. It does not refer to “registered proprietor or proprietor of an earlier registered trade mark”. The Act makes a distinction between a “proprietor” and a “registered proprietor”, with Section 2(v) thereof defining only the registered proprietor in relation to a trade mark as a person for the time being entered in the Register as proprietor of the trade mark. Thus when Section 33 refers to a “proprietor” as distinct from “registered proprietor”, reference thereto is evidently to a proprietor of an earlier trade mark.” 

Based on this reading, the Court went on to hold that the defence of statutory acquiescence is not available against the Plaintiff since it owns a registration of its mark; that therefore the provision contained in Section 33(1) is not applicable. 

While arriving at its decision, the Court placed reliance on a judgment of the Division Bench (M. Mudgal, J. and V.J. Mehta, J.) of the Delhi High Court in the case of Goenka Institute of Education & Research v Anjani Kumar Goenka & Anr., FAO (OS) No. 118/2009, wherein the Court had observed, but by way of obiter – “…Section 33 is with reference to the right of an unregistered user and a subsequent registered user…”. The Court in this earlier case had not directly pronounced on the issue of unavailability of the defence of acquiescence for being set up against a registered mark.

The Court’s attention had been drawn to two judgments of the Bombay High Court which had taken a different view on this point.

In Emcure Pharmaceuticals Ltd. vs. Corona Remedies Pvt. Ltd., 2014 SCC Online Bom 1064, the Court had observed – “All that Section 33 says is that where, as between two registered proprietors, the later registrant is able to show acquiescence of at least five years, certain statutorily mandated consequences follow. In other cases, the plea can well be taken, the only difference being that the statutorily mandated consequences in Sections 33(1)(a), (b) and Section 33(2) would not necessarily result.”.

Neel Electro Techniques vs. Neelkanth Power Station, 2014 SCC Online Bom 663, the other judgement of the Bombay High Court discussed by the Delhi High Court, had observed – “Section 33 deals with the case of two registered trade marks, registered at different points of time. If the proprietor of the earlier trade mark (registered prior in point of time) acquiesces in the use of the later trade mark (registered later in point of time) for five years, he cannot apply to have the registration of the later trade mark declared invalid or oppose the use of the later trade mark, unless the registration of the later trade mark was not applied in good faith.” 

The Delhi High Court found itself unable to concur with the opinions of the Bombay High Court in the two afore-mentioned cases. It stated – “Section 33 is found to be designed for the protection of a registered trade mark, by saving it from an action for passing off, by providing that if the proprietor of a mark has acquiesced in use of a registered trade mark for a period of five years, he/she shall not be entitled to apply for revocation of the mark or to oppose the use thereof.”

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.

Grounds for refusing a TM application must be communicated with order

In the matter of Intellectual Property Attorneys Association v. The Controller General of Patents, Designs & Trade Marks & Anr.[W.P.(C) 3851/2019], the Delhi High Court, vide its judgment dated October 16, 2019, held that the Registrar of Trade Marks is obligated to record the grounds for refusal/conditional acceptance of a trademark application as well as the material used by him in arriving at his decision, and to communicate the same in writing to the Applicant, under Section 18(5) of the Trade Marks Act, 1999.

The instant Writ Petition had been filed as the Petitioner was aggrieved by the non-speaking orders passed by the Registrar of Trade Marks while refusing certain trademark applications. The Petitioner submitted that the Registrar had failed to comply with the statutory requirements of Section 18(5) by not communicating to the Applicant any grounds for refusal of the applications.

It was further submitted by the Petitioner that Rule 36 of the Trade Marks Rules, 2017, which provides that the Applicant may request the Registrar (within thirty days of receipt of the decision of refusal/conditional acceptance) to state in writing the grounds for the decision as well as the materials used therefor, is inconsistent with the mandatory provision of Section 18(5) of the Trade Marks Act, insofar as it provides for sending the copy of the order to the applicant without the grounds for the decision.

The Court perused the submissions of the Petitioner and observed that “…the Registrar of Trade Marks is duty bound to send the copy of the order passed under Section 18(5) of the Trade Marks Act containing the grounds for refusal/conditional acceptance and material used by him in arriving at his decision to the applicant. Rule 36 of the Trade Marks Rules is arbitrary, unreasonable and inconsistent with the mandatory provision of the statute insofar as it empowers the Registry to communicate the decision without the grounds for refusal/conditional acceptance. In that view of the matter, Section 18(5) of the Trade Marks Act shall prevail over Rule 36 of the Trade Marks Rules.” Allowing the instant writ petition, the Court further heldthat “the Registrar of Trade Marks is directed to strictly implement Section 18(5) of the Trade Marks Act by recording in writing grounds for refusal/conditional acceptance and the order containing the grounds of refusal/conditional acceptance be sent to the applicant within two weeks of the passing of the order.”

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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