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Courts and the market for IP services

By Diljeet Titus
May 20, 2006 15:32 IST
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Intellectual property rights policies and precedents have substantially changed in the past decade both in the context of the environment in which they operate and in their impact on society. The total IP services market in India is currently estimated at about Rs 350 crore annually.

While the bulk of the IP services revenue comes from filing work {about Rs 200 crore (Rs 2 billion)}, the share of revenues from IP enforcement has been steadily increasing over the years and is currently estimated at about Rs 150 crore (Rs 1.5 billion).

The growth of the IP market in recent years has been fueled due to both beneficial policy changes as well as effective enforcement of IP rights through court processes.

Two types of judicial remedies are available to enforce IPR in India — civil actions seeking injunction orders against the infringer coupled with damages, and criminal sanctions in the form of fines and imprisonment in case of infringements.

Since courts recognise that international brand reputation and goodwill are spilling over to India, the doctrine of dilution has been distinguished as an independent doctrine in deciding cases of trademark misappropriation for unrelated products.

Trade mark infringement: Global repute in a trademark has been recognised, even if the trademark or copyright is not registered in India, and passing off has been restrained. The Delhi high court restrained the misuse of the marks "CAT" and "Caterpillar" for footwear in Caterpillar Inc vs Mehtab Ahmed.

Adjudicating a dispute involving the date of adoption of rival marks by parties conducting business in different countries, the Supreme Court held that public interest should not be imperilled and the ultimate test should be who was first in the market in Milment Oftho Industries vs Allergan Inc.

The Supreme Court held global adoption and use of the mark as prior and superior to subsequent adoption by the Indian company. The Supreme Court reasoned that the field of medicine is of an international character and businesses are constantly expanding beyond geographical boundaries.

India's courts have also extended pecuniary penalties for infringement and passing-off of trademarks beyond statutory provisions in cases of undue commercial exploitation by infringers which results in loss of business to the rightful owner.

Distinguishing between compensatory and punitive damages, in Time Incorporated vs Lokesh Srivastava, the Delhi high court awarded Rs 500,000 as punitive damages and also awarded Rs 500,000 as compensatory damages for loss of reputation and goodwill to the plaintiff.

Adding a new dimension, email fraud (or phishing) was held as a violation of the plaintiff's trademark rights in Nasscom vs Ajay Sood.

In this case, the defendants had sent emails to third parties, soliciting personal details and misleading them to believe that these emails originated from the plaintiff.

The Delhi high court considered the use of the plaintiff's trademark in emails by the defendants as a violation of the plaintiff's trademark rights. The parties settled the matter and the defendant agreed to pay the plaintiff Rs 1.6

million for violating the plaintiff's trademarks.

Copyright infringement: In Burlington Home Shopping Pvt Ltd vs Rajnish Chibber, the Delhi high court restrained the defendant from carrying on any business using the customer list included in the database exclusively owned by the plaintiff as the plaintiff has a copyright over his customer list.

Software piracy: In another landmark decision, delivered in Microsoft vs Yogesh Papat, the Delhi high court calculated actual loss of business caused to the plaintiff by the defendant selling pirated software as "freeware" with assembled computers.

The court considered the violation of the plaintiff's trademark and copyrights and awarded damages of Rs 1.97 million for the violation of the plaintiff's rights by the defendants. This is the highest award for damages given by an Indian court for trademark and copyright infringement.

Domain name: In Buffalo Networks Ltd vs Manish Jain, the Delhi High Court awarded Rs 100,000 to the plaintiffs as the defendants deceptively used the word "tahelka" as its domain name which was deceptively similar to the registered domain name "" of the plaintiff.

Criminal remedies: Effective remedies are also available under Indian penal statutes to punish infringers and also remedy increasing cases of data theft. Section 103 of the Trade Marks Act 1999, for instance, provides imprisonment for six months to three years and a fine of Rs 50,000 to Rs 200,000 for any person who uses or applies false trade marks, trade description with intent to defraud. The offence under Section 103 is complete as soon as the trade mark is falsified or falsely applied to goods or services.

Under the Copyright Act 1957, unauthorised copying, selling, hiring or distributing copyright material is an infringement of copyright. Under Section 63 of the Act, the known infringement or abetment to infringement of copyright is a criminal offence punishable with imprisonment for six months to three years along with a fine of Rs 50,000 to Rs 2,00,000.

In a precedent setting case, both criminal and civil legal action was taken in the widely reported case of data theft by a Nigerian lawyer Alfred "Shadow" Adebare and his three associates who had copied and removed entire electronic records, proprietary precedents and client confidential information from the computer network systems of their employer law firm.

The Delhi Police registered a case of hacking, data theft, copyright infringement and related criminal offences of breach of trust and cheating. Action has also been initiated to restrain the accused from infringing the copyrights and using and disseminating the proprietary and confidential information belonging to the employer law firm.

All the cases discussed have been decided by the Delhi high court, which has achieved distinction for its sensitive handling of intellectual property infringement and data theft cases. Delhi has increasingly emerged as the preferred jurisdiction for action against intellectual property violations.

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Diljeet Titus
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