In the matter of Assistant Commissioner of Income Tax v. M/s Balaji Trust [ITA 5139/MUM/ 2017], Single Member [S. Rifaur Rahman] of the Income Tax Appellate Tribunal, Mumbai, vide order dated November 25, 2021, dismissing an appeal filed by the Assessing Officer, has effectively held that brand logo is an ‘artistic work’ and cannot be subjected to tax as a ‘work of art’.

Section 56(2)(vii) of the Income Tax Act, 1961deals with ‘Income from other sources’ and states that “… the following incomes, shall be chargeable to income-tax under the head Income from other sources, namely:… (c) any property, other than immovable property,[Explanation.—For the purposes of this clause,— …(d) “property” means the following capital asset of the assessee, namely:—…(viii) any work of art;  or…”. The question therefore arises whether a brand logo registered as ‘artistic work’ under the Copyright Act can be a ‘property’ and be subjected to income tax as ‘work of art’?

The plaintiff contended that the definition of ‘property’ covering the term ‘work of art’ in the Income Tax Act is pari materia with the definition of ‘artistic work’ provided in the Practice and Procedure Manual [Artistic Work] published by the Copyright Office. Since the brand has been registered as ‘artistic work’ under the Copyright Act, ipso facto, it falls under the category of ‘property’ under Section 56(2)(vii) of the Income Tax Act read with Explanation (d).

The defendant contended that ‘artistic work’ refers to work which is an artistic innovation and is exceptional in its artistic quality. The registration of brand logo under the head ‘artistic work’ does not refer to the characterization of the brand but is simply a reference as to how does the logo looks like.

The tribunal concluded that “…a simplicitor registration of the logo…under the Copyrights Act, 1957 as “an artistic work” would not ipso facto mean that it is in the nature of “a work of art”…is neither an artistic innovation nor possesses any artistic quality for being brought within the meaning of “any work of art” as contemplated in the definition of “property” in Explanation (d) to Section 56(2)(vii) of the Income Tax Act, 1961 the same, merely for the reason that it was registered under the Copyright Act, 1957 as “an artistic work” could not be held to be in the nature of “a work of art”.”

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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In the matter of M/s. Novex Communications Pvt. Ltd. v.  DXC Technology Pvt. Ltd. & Cognizant Technologies Solutions India Pvt. Ltd. [Civil Suit Nos. 407 and 413 of 2020], a Single Judge [N. Anand Venkatesh, J.] of the Madras High Court, on December 8, 2021, held that the plaintiff, not being a copyright society, was not entitled to grant copyright licences under Section 33 of the Copyright Act, 1957 (“Act”).

Section 33(1) of Act provides that – “No person or association of persons shall…commence or, carry on the business of issuing or granting licences…except under or in accordance with the registration granted under sub-section (3)”. Section 33(3) provides for the registration to persons as a Copyright Society. At the same time, proviso to Section 33(1) states that – “an owner of copyright shall, in his individual capacity, continue to have the right to grant licences in respect of his own works…”.  The above statutory anomaly raises the question that when a copyright owner assigns their copyright to a commercial entity, can such entity carry out ‘business of granting licenses’ to third-parties, without being registered as a copyright society?

In the present case, the plaintiff submitted that they are the absolute owners of the copyright in the sound recordings by virtue of the assignment agreements executed in their favour. Thus, as owners, they have an unfettered right to issue licences independently of any copyright society. On the other hand, the defendants argued that Section 33 precludes the plaintiff from issuing licences except through a copyright society. Therefore, they did not have to obtain licences from the plaintiff for the on-ground performance of such sound recordings.

The Court rejected the plaintiff’s argument and held that, “the right of an owner, in his individual capacity, to exploit a right by issuing a license remains untouched. However, when it comes to the “business” i.e., a commercial enterprise of issuing licenses, the law, as it presently stands, requires it to be routed only through a copyright society registered under Section 33(3) of the Act.” The Court observed that the plaintiff’s grant of licences had transcended into the realm of business, and hence the statutory embargo of Section 33 applied to them. Accordingly, the Court held that the defendants had not violated the rights of the plaintiff by not obtaining licenses from them for the on-ground performance of sound recordings and dismissed the plaints.

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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In the matter of ITC Limited v. N. Ranga Rao & Sons Private Ltd. [O.S.A Nos. 183 and 184 of 2021], a Division Judge Bench [Sanjib Banerjee and P.D. Audikesavalu, JJ.] of the Madras High Court, by judgment dated November 15, 2021, allowed the appeal and set aside the previously passed injunctions, holding that similarity in the combination of primary colours of the colour scheme on the packaging, cannot by itself be a ground for injunction.

Section 29 (7) of the Trade Marks Act, 1999 (“the Act”) states, “A registered trade mark is infringed by a person who applies such registered trade mark to a material intended to be used for labelling or packaging goods, as a business paper, or for advertising goods or services…” and Section 2(1)(zb) of the Act defines, “‘trade mark’ means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours;”. The question that arises is whether similarity in a ‘combination of colours’ can be a ground for trademark infringement by itself, or does it need to be assessed as a whole with the packaging?  

The Respondent argued for their “specific” colour combination of yellow-gold, which they have conceived and adopted for their products and have obtained statutory protection by obtaining registration under the Act. The Respondent alleged that the Appellant was engaged in the business of similar goods and had used a similar combination of colours.

The Appellant argued that no one can claim exclusivity or ownership over any colour combination, particularly if two primary colours are involved. And further argued that their names, get-up, and packaging materials are distinct.

The Court upheld the Appellant’s claims clarifying that the packaging was distinct except for the similar colour combination and that a combination of colour scheme of primary colours cannot by itself form a basis for issuing an injunction on the grounds of passing off; and made relevant observations: “upon a look at the defendant’s packaging material, notwithstanding the colour combination thereof, there is scarcely any resemblance to the plaintiff’s packaging apart from the fact that the red and yellow hues are somewhat common” and that “… there does not appear to be any element of passing-off, notwithstanding the similarity in the colour scheme where two primary colours are used in both cases, there was no justification or basis for issuing any injunction.”

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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In the matter of Jumeirah Beach Resort LLC vs Designarch Consultants Pvt Ltd. & Anr. [CS (COMM) 124/2021], Single Judge [Jayanth Nath, J.] of the High Court of Delhi, vide judgment dated November 9, 2021, ruling in the favour of the plaintiff granted an interim injunction against the defendant under order XXXIX R1&2 of CPC, holding effectively that the principle of anti-dissection and identification of dominant mark complement each other, hence using of the dominant part would amount to trademark infringement.

Section 17 of the Trademark Act, 1999 states “Effect of registration of parts of a mark.  (1) When a trademark consists of several matters, its registration shall confer on the proprietor exclusive right to the use of the trademark taken as a whole.”  The question that arises for consideration is whether an infringing trademark would be determined strictly when ‘taken as a whole’ or if even the adoption of a dominant or essential part of the infringed trademark can be brought within the ambit of ‘taken as a whole’.

The plaintiff contends that the defendant’s marks are identical and/or deceptively similar to the plaintiff’s prior registered and well-known marks in which copyright also subsist. The plaintiff’s BURJ marks have been extensively, continuously, and uninterruptedly used on a worldwide basis including in India. Further, it is urged that the dominant part of the trademark of the plaintiff is infringed and hence, an injunction ought to be granted.

The defendant contended that using the composite mark BURJ AL ARAB by the plaintiff does not give the right over the word BURJ as it is a prefix and common to trade. Plaintiff is not permitted to claim infringement by inviting the court to dissect its mark and conferring right over BURJ per se. Further, the defendant owns the composite mark BURJNOIDA that has been in use since 2010 and has spent a huge amount of money for its ongoing construction.

The court accepted the plaintiff’s claim that their dominant part (BURJ) has been copied malafidely and held “that the principle of anti-dissection does not impose an absolute embargo upon the consideration of the constituent elements of a composite mark.” Further, the Court passed an injunction order in favour of the plaintiff and against the defendants, restraining the defendants from in any manner using the trademark BURJBANGALORE, BURJMUMBAI, BURJDELHI, BURJGURUGRAM, and BURJGURGAON or any other similar trademark.

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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In the matter of Tata Sons Private Limited v. Hakuna Matata Tata Founders [IA 8000/2021 in CS (COMM) 316/2021], a single judge [C. Hari Shankar, J.] of the High Court of Delhi, vide Judgment dated October 26, 2021, while dismissing an injunction application against trademark infringement, held that necessary connection between the foreign-seated defendants’ activities and India must be established for the exercise of jurisdiction by the Court.

Section 134 of the Trade Marks Act, 1999 provides that “No suit…..shall be instituted in any court inferior to a District Court having jurisdiction to try the suit”. Further, Section 20 of the Code of Civil Procedure, 1908 confers jurisdiction on courts where “the defendant….carries on business” or “cause of action, wholly or in part, arises”. The question for consideration is whether the expression “carries on business” or “cause of action….arises” would include activities on the internet thereby providing jurisdiction to the Court to issue injunction.

The Plaintiff contended that they provide a platform for crypto-currency trading under their well-known trademark ‘TATA’ and since the defendants dealt with crypto-currency under the name “TATA coin/$TATA” which was accessible in India through website and social media pages, there was purposeful availment of jurisdiction of the court. They further contended that the effect of defendant’s infringing activity was felt in India as the accessibility of the same led to the dilution of plaintiff’s goodwill and had adversely affected their business. Hence, the defendants should be restrained from using the trademark of the plaintiff. The counter-argument to this being that mere accessibility of the website of the overseas defendants, by persons located within the jurisdiction of the Court, is not sufficient to clothe the Court with jurisdiction to act against the defendants.

The Court denied interim relief to the plaintiff and, after analyzing various judgments on the issue, which provided that the intent to target customers in India is a mandatory governing consideration for courts to exercise jurisdiction, held that “The operation of the Trademarks Act and the CPC statutorily extend only to the boundaries of India. In the case of internet infringements, no doubt, the decision of the Court may, at times, operate against entities located outside India. That, too, however, would be subject to existence of the necessary connection between the activity of the foreign-seated defendants and India. More specifically, intent, of the defendants, to target India, must be established.”

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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