What is Intellectual Property Law

NIFT

Intellectual Property Rights Case Studies on Infringements Abhishek Sinha 8/28/2012

Faculty Guide: Mr. Tanmay Kandekar

WHAT IS INTELLECTUAL PROPERTY LAW? Intellectual property law is that area of law which concerns legal rights associated with creative effort or commercial reputation and goodwill. The subject matter of intellectual property is very wide and includes literary and artistic works, films, computer programs, inventions, designs and marks used by traders for their goods or services. The law deters others from copying or taking unfair advantage of the work or reputation of another and provides remedies should this happen. There are several different forms of rights or areas of law giving rise to rights that together make up intellectual property. They are: copyright rights in performances the law of confidence patents registered designs unregistered design rights trade marks passing off malicious falsehood Copyright infringement Case Study 1: Case Study: ViacomV. YouTube Law360, New York (April 19, 2012, 1:14 PM ET) -- The Second Circuit recently breathed new life into Viacom International Inc.‘s and other video content owners‘ copyright infringement lawsuit against Google Inc.'s YouTube that alleges over 70,000 instances of infringement on YouTube‘s site between 2005 and 2008. However, in doing so, it did not severely limit the ―safe harbor‖ protections of the Digital Millennium Copyright Act as Viacom had urged the court to do. Rather, it held that such protections would only not be available to YouTube if it had actual knowledge or was generally aware of facts and circumstances of specific infringing activity. The fact that YouTube was generally aware of prevalent infringement on its site did not preclude it from the DMCA‘s safe harbor. In 2010, the District Court for the Southern District of New York granted summary judgment in YouTube‘s favor, finding that it was immune from the plaintiffs‘ claims of copyright infringement as YouTube was eligible for the safe harbor protections available under the DMCA for qualified service providers such as YouTube. The main issue on appeal was whether YouTube could be deprived of the DMCA safe harbor protections if it was generally 1|Page

aware of prevalent infringement on its site, or whether, instead, it would only be deprived of such protections if it had actual knowledge or was generally aware of specific infringing activity. The Second Circuit agreed with the district court‘s holding that the DMCA‘s safe harbor is only unavailable where a service provider has actual knowledge or is generally aware of facts and circumstances of specific infringing activity. However, it did still reverse the district court‘s granting of summary judgment in favor of YouTube, as it found that a reasonable jury could find that YouTube did in fact have the requisite actual knowledge or general awareness, and remanded the case back to the district court for this determination. It also asked the district court to determine if YouTube should be ineligible for safe harbor protections because it engaged in willful blindness. Safe Harbor Protections The safe harbors of the DMCA protect a qualifying online service provider from claims of copyright infringement for content posted by users of the service provider‘s service, as long as the service provider, upon becoming aware of the infringing activity, acts expeditiously to remove the infringing material. One of the criteria entitling a service provider to safe harbor protection concerns whether the service provider was aware, specifically or generally, of infringing activity. The focus of the Viacom appeal was whether the general awareness language in one of the safe harbors, referred to as ―Red Flag Marc Rachman Holly Melton Knowledge,‖ only required general awareness of prevalent infringing activity on YouTube, or, instead, required general awareness of facts and circumstances of specific infringement. Viacom’s Complaint In Viacom‘s case before the district court, Viacom alleged that between 2005 and 2008, over 60,000 instances of video clips that were posted on YouTube contained unauthorized copies of Viacom‘s copyrighted shows, such as "SpongeBob SquarePants" and "The Daily Show." It was not disputed that Viacom sent a massive takedown notice to YouTube in 2007 and that YouTube quickly responded by removing all the referenced clips from its site. Viacom argued that YouTube, nonetheless, should not be entitled to the DMCA‘s safe harbor because it was generally aware of prevalent infringement on its service and thus was not eligible for safe harbor protection. Viacom also argued that its take-down notice required YouTube to take down all infringements of its content referenced in the takedown notice and not just the specific instances of infringement identified in the takedown notice. YouTube’s Defense YouTube, in opposition to Viacom‘s appeal, argued that it was entitled to the safe harbor defense as it was not actually or generally aware of the specific infringements claimed by Viacom until it 2|Page

received the DMCA takedown notice from Viacom, and that once it did receive the notice, it acted expeditiously in removing all the referenced clips. YouTube further argued that it did not have an affirmative duty to search for all infringements of Viacom‘s content, but only those postings it was made aware of by Viacom. As noted by the Second Circuit in its decision, by the time of the parties‘ summary judgment briefing, site traffic on YouTube had reached over 1 billion daily views, with more than 24 hours of new video uploaded to the site every minute. YouTube argued that with such volume, it would be prohibitively burdensome to require it to actively monitor every upload on its site for potentially infringing content. Conclusion This decision confirms that online service providers can still rely on the safe harbor provisions of the DMCA in defending against copyright infringement claims, even if these providers have general awareness of prevalent infringing activity on their websites. It is general awareness of specific instances of infringement that makes a service provider ineligible for the protections of the safe harbor. What remains unclear is the factual showing a copyright holder will have to make in order to show general awareness of specific infringing activity and to establish an inference of specific knowledge based upon the willful blindness doctrine. We expect that the proceedings before the Southern District upon remand will flesh out some of these issues. Online service providers do need to continue to have in place procedures for expeditiously handling DMCA takedown notices, and should quickly address instances where they otherwise have knowledge of specific infringing activity, whether that knowledge is actual or general. As to copyright owners, it is in their best interests to quickly send out DMCA takedown notices to service providers of infringements that they discover and to specifically identify the infringing materials that they are seeking to have removed from the service provider‘s site. Case Study 2: Indian Context: SCIL(Super Cassettes Industries Limited) vs. YouTube Case background The Delhi High Court has, in its own way done a huge favour, to the copyright laws & principles. The judgement passed by the court is apt in this case, as it deems to have been spot on, in preserving the exclusive rights of the copyright owners & thereby restoring their faith in the legal system. This also sets up an ideal example for the evolving legal aspirants & established law professionals.

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Facets of the case SCIL, an owner of a reputed music label, T-series, moved the Delhi High Court against the respondents, YouTube, a component of Google, on account of rank infringement. Basically, YouTube LLC & its parent Google Inc. have on their website (Youtube.com), been showing aides& SCIL‘s copyrighted songs without acquiring any Licence or permission. Thus they seek damages. Rebuttal Under this head, I would be elucidating the grounds which might have favoured YouTube in evading copyright infringement, in consonance with the arguments put forth by the Delhi high court, in support of the injunction order passed by them against the respondents. YouTube might have contended that they were not liable for any copyright violation, on account of their user policy which is published, whenever a new user try to upload any content on its site. It basically, prompts the individual that he should not upload any content, which has not been obtained with due affirmation from the concerned owner. It lays down the guidelines for the users in compliance of which, he may deter himself from committing theft. Also, the respondent may bring into the picture, the aspect of performing a technically impossible task of creating filters, that would restrict the uploading of over 300000-500000 illegal content on their site. On the contrary, the prime reason put forth by the court in support of the injunction order passed , was that YouTube had depicted a mala fide intention of making profits at the expense of SCIL, by broadcasting their songs for free to the public, coupled with displaying advertisements and collecting revenue from the same. It also brought into light the malignant nature on the part of YouTube, in showcasing SCIL‘s songs for free, which resulted in forcing the appellant into severe loss on its revenue, accruing from the sale of CDs, DVDs and audio cassettes. Judgement The Delhi High Court passed an order of interim injunction, against the business practices of YouTube &its parent company Google, restraining them from making any profits at the expense of rightful copyright owners. They were barred from reproduction, adaptation., transmission, distribution, or displaying on their website or any other manner, any audio visual works in which SCIL owns exclusive, valid or subsisting copyright.

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Analysis In my opinion, the Delhi High Court has hit the bull‘s eye, in this instance, by passing an interim injunction against the illegal & unethical business practices of YouTube & its parent co., Google. They have succeeded in re-enforcing the certitude of the owners of the copyright works in the legal system, by assuring them the preservation of their Copyright exclusive rights. This therefore, would also buoy advancement of art & science. I would support my stance, in the light of the following reasons; YouTube, along with its parent Co. Google have undoubtedly indulged themselves into copyright violation, by displaying copyright – protected audio & videos, without obtaining required license for the same, from the concerned owners. Further to outline, YouTube had also displayed its Malafide intentions of minting green paper, using hard toil done by SCIL‘s music label T-Series, by not only showing their songs for free to the public, but also displaying advertisements & collecting revenues from the same. Similarly it had forced SCIL into incurring huge losses, by broadcasting their songs for free to the public, Basically, SCIL‘s revenue is generated from the manufacturing of DVD‘s, CDS, & audio cassettes and from royalties collected by licensing their original work to hotels, restaurant, telecom operators & internet services. Now, if the public has acquired a free access to their work, why would they opt paying for the same. Thus their scope of generating revenues out of their own work, has been reduced to zilch. Also its important to understand the hypocrite nature of Google, when they contend that its technically impossible for a website worth $158 billion to make filter, restricting the upload of 300000 to 500000 illegal contents, where on the contrary various minor sites sales manage to restrict the same. Trademarks Trademark infringement is a violation of the exclusive rights attaching to a trademark without the authorization of the trademark owner or any licensees (provided that such authorization was within the scope of the license). Infringement may occur when one party, the "infringer", uses a trademark which is identical or confusingly similar to a trademark owned by another party, in relation to products or services which are identical or similar to the products or services which the registration covers. Case Study 3: The Case: LV Vs. Google

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For several years, Google and a number of luxury brands, including Louis Vuitton, have been fighting a battle

The object of discussion is the Google Ad Words system, the "purchase" of keywords by advertisers who post their advertisements on the search results page when an Internet user searches for that particular word. LMVH‘s beef was with ads selling Louis Vuitton replicas being shown when someone Googled ―Louis Vuitton‖. They were choked that Google would be selling the Louis Vuitton trademark to third parties – specifically websites selling counterfeits. •

2003: In 2003 LMVH sued Google in French courts and eventually won in 2005

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2005: Google was convicted of promoting counterfeiting and was forced to pay LVMH damages

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2006: The Paris Court of appeal went even further by extending its verdict to the natural listing of the search engine, claiming that the American Internet giant was technically competent enough to filter search results and exclude counterfeiting websites

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2008: The appelate court asked the European Court of Justice to speak on the case, based on the European directive on brand protection

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2009: The public procecutor of the European Court of Justice, Poiares Maduro, gave his opinion giving Google the advantage, saying that Google did not cause any damage to brands by allowing advertisers to purchase key words corresponding to registered brands

The Judgment The European Court of Justice has today given its judgment in this case. Essentially it has decided that: 1. Louis Vuitton can prevent use of its trade mark as a keyword, without the consent of Google. 2. Louis Vuitton cannot directly prevent use of its trade mark as a keyword by Google unless Google has "played an active role of such a kind as to give [Google] knowledge of, or control over, the data stored". While the first of these seems clear, the second is not. It begs, among others, the questions "how much knowledge" and "how much control".

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Case Study 4: Case Study: Rosetta Stone V. Google The case is important because it indicates that there are circumstances in which search engines may conceivably be held liable for facilitating trademark infringement committed by others through their keyword advertising programs and, importantly, that the search engines‘ own use (sale) of others‘ trademarks as keywords may render them liable for direct infringement. This could renew interest in search engines as potential targets for enforcement actions. The decision also implicitly acknowledges that keyword advertising programs are being used by some advertisers for deceptive purposes, including trademark infringement and counterfeiting. Finally, the decision corrects several errors of law committed by the lower court. Overall, it is a favorable decision for trademark owners. Rosetta Stone sued Google in 2009, claiming that the search giant committed direct and contributory trademark infringement and trademark dilution, and was unjustly enriched, by allowing purveyors of counterfeit Rosetta Stone software to purchase Rosetta Stone‘s trademarks as keyword search terms. This resulted in ―sponsored links‖ ads being displayed alongside Google‘s organic search results. Links in the ads led unsuspecting consumers to websites which sold the counterfeit software. Although the district court had granted summary judgment on all counts, the Fourth Circuit found that a reasonable fact finder could determine that the use of Rosetta Stone‘s mark by Google and its advertisers is likely to cause confusion (trademark infringement) or dilution (a diminishing of the distinctiveness of a famous mark). Direct Infringement The Fourth Circuit cited Rosetta Stone‘s survey and anecdotal evidence of actual confusion, including the deposition testimony of five customers who attempted to buy a "Rosetta Stone" software package from a site linked to a sponsored keyword ad but ended up receiving counterfeit software instead. The district court had found the testimony unavailing because the number of affected consumers was de minimus, and because they knew they were not purchasing the software directly from Rosetta Stone. The Fourth Circuit held that the testimony could not be rejected at this stage of the case, because the consumers testified that they thought they were purchasing from authorized resellers. It also determined that the events testified to, in conjunction with other evidence of customer complaints, were not de minimus. The appellate court also relied heavily on internal studies conducted by Google prior to its 2004 trademark-keyword advertising policy revision, which concluded that ―the likelihood of confusion remains high‖ when a trademark term is used in the title or body of a sponsored link, and which reflected that ―94% of users were confused at least once‖ by such a practice (which Google allows today). Additionally, there was deposition evidence that two of Google‘s own employees were unable to determine (without further research) which sponsored links in a search results page were for authorized Rosetta Stone resellers, reflecting an uncertainty about the 7|Page

origin of the product which the Fourth Circuit deemed ―quintessential actual confusion evidence‖ for summary judgment purposes. Contributory Infringement In addition to holding that sufficient evidence had been presented to support the possibility of an ultimate finding of direct trademark infringement, the court determined that Rosetta Stone‘s claim of contributory infringement (which requires knowledge that one is facilitating another‘s wrongful acts) could also proceed, relying, in part, upon Rosetta Stone‘s evidence that Google continued selling keywords to entities it knew to be infringers or counterfeiters, and holding that the district court had applied the wrong standard in weighing the evidence. Functionality The lower court ruling had included a fairly egregious error of law — an unsupported extension of a trademark legal principal known as the ―functionality doctrine.‖ This doctrine holds that product features that are purely functional (e.g., allowing for improved mechanical operation or cheaper manufacture of a product) cannot acquire the distinctiveness necessary to serve as a source-indicator — an essential trademark property. The district court misapplied this doctrine and held that Google‘s use of Rosetta Stone‘s mark as a keyword to trigger ads performs an ―essential indexing function‖ that is protected under the functionality doctrine. The Fourth Circuit correctly held that the doctrine ―simply does not apply in these circumstances,‖ explaining, in part, that the accepted functionality doctrine addresses the manner in which the trademark owner uses the mark, rather than the use of the mark by the accused infringer. Conclusion The Rosetta Stone decision is helpful to trademark owners, advertisers, and practitioners, as it reaffirms that traditional trademark infringement and dilution analysis applies in the context of keyword advertising cases and corrects serious errors of law committed by the district court. In a number of respects, it is a setback for Google, which will again have to defend its trademark keyword ad policy in the trial court (unless the case is settled). The Fourth Circuit joins other courts that are not prepared to give Google and other search engine companies a free pass when it comes to trademark infringement and dilution claims. Additionally, the damaging internal Google studies concerning trademark confusion that Rosetta Stone unearthed could be useful fodder for future plaintiffs. In the long run, though, Google will likely benefit from the greater legal clarity provided by the decision. The company‘s strategy of steadily liberalizing its AdWords trademark policy, to the point where it now allows the use of others‘ trademarks as keywords and in ad text, and of aggressively defending that policy in court, has succeeded brilliantly until now, and trademark keyword ads have contributed significantly to the bottom line of one of the world‘s most profitable and successful companies. Google‘s lawyers are certainly prepared to go to trial, if necessary, to defend the company on the basis of classic trademark likelihood of confusion factors and defenses, as was already done in the first keyword case to be tried, Gov‘t Employees Ins. Co. v. Google Inc. 8|Page

While other trademark owners may now be considering asserting their own claims against Google, with its deep pockets, or other search engines, many who have already gone that route have been left wanting. In most cases, where a bad actor advertiser can be identified, and real harm can be shown, the better strategy may be to focus on the advertiser rather than on the search engine. Companies are advised to protect their trademarks by remaining diligent in their review of, and action against, competitors who improperly use their marks in connection with keyword ads. Advertisers, on the other hand, should review their keyword advertising policies to be sure that they do not utilize competitors‘ trademarks as keywords in a manner that crosses the line from fair use to infringement, running the risk of liability. Besides being a sound business practice, staying within the bounds of legally defensible advertising will avoid an ―unclean hands‖ defense, should the advertiser find that its own mark is being purchased as a keyword by a competitor who does cross the line. Case Study 5: BAJAJ AUTO LTD. vs. T.V.S. MOTOR COMPANY FACTS OF THE CASE. The facts of the case go through the various stages:

1. Bajaj’s patent: According to the Bajaj Auto Limited (hereinafter the appellant), it was granted Indian Patent No. 195904 in respect of a patent application titled ―An Improved Internal combustion engine working on four stroke principle” with a priority date of 16th July 2002. The patent was granted on 7th July, 2005. Features of the invention are: a. Small displacement engine as reflected by a cylinder bore diameter between 45 mm and 70 mm. b. Combustion of lean air fuel mixtures; c. Using a pair of spark plugs to ignite the air fuel mixture at a predetermined instant. 2. What was the Patent all about? In the patent, the invention by the applicants called ―DTS-i Technology" was relating to the use of twin spark plugs for efficient combustion of lean air fuel mixture in small bore ranging from 45 mm to 70 mm internal combustion engine working on 4 stroke principle. 9|Page

3. How was the invention patentable? According to the applicants, their invention was patentable because it qualified the tests of novelty, non-obviousness and industrial application. Following were the grounds on which the applicants corroborated their claim: 

According to the appellant, it has invented a unique technology of using two spark plugs for efficient burning of lean air fuel mixture in a small bore engine in the size between 45 mm and 70 mm. The use of two spark plugs in large bore engines or in high performance or racing bikes was known in the Automobile industry. But the invention of the appellant was not known in the industry.

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In small bore non-racing engines, the need to have more than one spark plug was never thought necessary if there were no advantages of a dual spark plug. But according to the applicant, its invention was on the application of twin plugs in small bore engine in a specific engine running condition of lean burn, to derive positive merits of improved fuel efficiency and emission characteristics.

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Use of two spark plugs was applicable in the engines of large bore size. In case of the small-bore engines using twin spark plugs, those engines were not lean burn.

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In the first eight months of the that financial year, the applicant manufactured and marketed 814,393 two wheelers with ―DTS-i Technology‖ out of a total of 1,501,241 two wheelers sold. Therefore, the said ―DTS-i Technology‖ stated to have been invented by the applicant has accounted to 54.25% share of Bajaj two wheelers.

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Applicants have spent considerable amount in marketing and advertising and received appreciation through out the world as recipients of various world awards and the product is of economic advantage of the country.

Thus, according to the applicant its invention was not obvious before the invention and it was novel, since it applied on the small bore lean burn engines. The industrial use of the invention cannot be done away with as it helped the automobile industry in cutting short the fuel consumption. Moreover, after the invention, the share of Bajaj motorcycles with DTSi Technology has tremendously increased. 4. TVS launches FLAME- the Bone of Contention: The Respondents, M/s. TVS Motor Company Limited announced to launch motor bikes of 125CC on 14th December 2007 under the trade mark 'FLAME'. The motorcycle was powered with a lean burn internal combustion engine of bore size 54.5 mm with a twin spark plug configuration, which according to the Bajaj Auto Ltd., infringes its patent. Therefore, before the launch of motor bikes, the applicants have brought the suit before the court to protect their intellectual property. 10 | P a g e

5. TVS files suit under section 105 and 106 of the Patents Act, 1970: In October, 2007, the respondent filed the suit (C.S. No. 979 of 2007) before the Madras High Court under Sections 105 and 106 of the Patents Act, 1970 alleging that the statement made by the applicant on 1st and 3rd September, 2007 constituted a groundless threat. They learnt that the respondent has also filed a suit for defamation against the applicant in the Bombay High Court. 6. Application for revocation of the applicant’s patent: The applicant also came to know that only 7 days before the launch of the proposed 125-CC motorcycle, the respondent filed an application for revocation of applicant's patent No. 195904 before Indian Patents Appellate Board (―IPAB‖) under Section 64 of the Patents Act, 1970. 7. Launch of the disputed bike: As opposed to the expectations of the applicants, the respondents later in the month of December of 2007, launched the bikes without making any change into that. PLEADINGS BY THE PARTIES. The applicants submitted their affidavit and made various contentions regarding the validity of their patent. The respondents then filed the counter-affidavit, denying the charges of infringement against them. They have challenged the validity of the applicant‘s claim by raising various grounds. The contents of the affidavit of the respondent in their suit C.S. No. 979 of 2007 were regarded as the reply of the respondents in their counter-affidavit in the case C.S. No. 1111 of 2007. 1. Pleadings by the appellants. Following were the pleadings made by the applicants in their affidavit: 

The patent granted to the applicant is valid and subsisting.

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The respondents can not save its skin by claiming that it is using 3 valves in the engine since the number of valves is not an essential feature of the applicant's invention.

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The specifications of the respondent‘s TVS Flame have the similarities with the patenting technology of the applicant.

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Grant of injunction is essential to protect the statutory right of monopoly conferred on the applicant by virtue of the patent. Otherwise, its use by the respondent would severely prejudice the statutory right apart from damaging the reputation and goodwill, which cannot be compensated in pecuniary terms.

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The damage caused by the infringing act, will have telling effect on the market share loss, relative position in the industry, impact on competitiveness, impact on industry rankings etc. of the applicant, which cannot be measured in terms of money.

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The applicants have launched its motorbike with effect from the year 2003 and steadily increased the sale in these long four years, whereas the respondents have launched ―FLAME‖ only on 14.12.2007 and they have not sold the said motorbike on an extensive scale and therefore, the applicant is entitled for an order of injunction.

2. Pleadings by the respondents. Following were pleaded by the respondents in their counter-affidavit: 

Applicants has unjustly threatened and defamed the respondent to secure illicit market advantage for its product over that of the respondent, instead of moving the Court to seek justice.

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There are inherent and explicit contradictions in the stand of the applicant as it is seen in the various documents relied upon by the applicant for protection of its Patent No. 195904.

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The use of two spark plugs in an IC engine with three valves was a prior art and therefore, the applicant cannot seek patent for the use of two spark plugs in an IC engine, and in order to avoid the said situation, the applicant has resorted to an art of deception by introducing a limitation of bore size to the US Honda patent with full knowledge that US Honda patent did not have any such limitation.

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By filing an application for revocation of patent given to the applicant, the respondent has questioned the very validity of Patent No. 195984 on several grounds.

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The respondent has filed an application for revocation of the applicant's patent before the IPAB, Chennai even on 24th August 2007. Inasmuch as the very validity of the patent of the applicant is in question and the same is in challenge, the applicant is not entitled for any injunction.

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Even in the event of applicant succeeding in the suit, it can be compensated in terms of money.(criticize)

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The US Honda Patent No. 4534322 dated 13th July, 1985 has been in the public knowledge for over 20 years. Arrangement of installation of two spark plugs in the respondent‘s cylinder is exactly as per the arrangement in the said Honda Patent, which expired on 12 th August 2005.

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The construction of three valve configuration and their working, in the engine is protected by patent granted to AVL being US Patent No. 6250 146 and Patent No. 196636, the respondent is entitled to use the same is licensed to the respondent.

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While the applicant's claim is two spark plugs with two valves, the respondent's arrangement is two spark plugs with three valves.

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The claim of the applicant that it invented a spark plug centric engine comprising two spark plugs, which resulted in lean air fuel mixture is not an invention due to various reasons. a. The applicant conceded use of two spark plugs in small bore engine exists. b. The applicant attempted to confuse the functioning of IC engine and particularly that of the spark plugs. In the functioning of the four-stroke IC engine, which involves ―intake stroke, compression stroke, power stroke and exhaust stroke‖, the spark plug comes in not to cause lean air fuel mixture, but to burn it. c. IC engine is common for automobiles, two wheelers, three wheelers and four wheelers and also for aeronautics. Hence, the earlier use of two spark plugs in large bore IC engines denies the applicant from claiming protection over its patent.

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The licence given to the respondent is distinct and different from that of the applicant's patent.

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The third valve in the three-valve arrangement of the respondent is not mere ornamental. The applicant has not chosen to challenge the licence granted in India in respect of the three valve arrangement of AVL despite the fact that even on 3rd September 2007, the respondent has disclosed that its, three valve arrangement, founded on AVL patent. In the absence of challenge to AVL patent, it is open to the respondent to use the arrangement with the AVL patent.

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The applicant changed from plug centric description to valve centric description from the specification of the year 2003 and the amended specification of the year 2004. The said change by the applicant was due to the existence of Honda US patent No. 4534322, wherein the Honda was using three valve systems. The change was effected by the applicant only to distinguish from that of the Honda.

To sum up the arguments forwarded by the respondents, following were the grounds used by the respondents to challenge the patent of the applicants:

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1. The concept of two spark plugs being prior art: The respondent places reliance on various published papers to substantiate its claim1. They also plead that the use of twin spark plugs in lean burn engines is known as US Patent No. 5320075 titled ―Internal Combustion Engine with Dual Ignition for a lean burn‖. 2. Use of two spark plugs in engines with narrow bore size of 45mm-70mm being prior art: The respondent has also referred to Takegawa Cylinder heads and Honda Bros, NC 25E. Kawasaki KZ 1000 SI and Kawasaki KZ 1000 SI have the configuration of two valves per cylinder with twin plugs, cylinder bore size is 69.4mm. Honda NT 400, as per the specification stated in the advertisement, contains 2 cylinders with each cylinder has a bore size of 64mm with 2 spark plugs per cylinder. 3. The third valve arrangement of the respondent is protected by patent licensed to it by AVL List GMBH: According to the respondent, the spark plugs in the engine in its vehicle “FLAME” are arranged in a different way in comparison to what is claimed by the applicant's patent.

The respondent also refers to various provisions of Patent Act, 1970 to state that there is no infringement of a patent unless each and every one of the claimed elements was present in the article, which is alleged to infringe the patent and further, such element also act in relation to one another in the manner claimed, and according to the respondent, its product is different from that of the applicant and therefore its product does not infringe the patent of the applicant by explaining the technical reasons. JUDGMENT AND ITS ANALYSIS: The learned single judge, after considering the submissions of both parties and considering various facets of the case came to the conclusion. The court relied upon the principles in granting interlocutory injunction including any patent action. The principles are: 

The plaintiff must prove prima facie case that the patent is valid and infringed;

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Balance of convenience is in favour of plaintiff; and

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Irreparable loss that may be caused to the plaintiff by not granting an order of injunction.

1. Prima Facie Case. The court also analysed the argument of the applicants that after the amendment in Section 48 of the Patents Act, 1970, it should be treated that once a patentee files a suit for infringement based 1

Indian Patent Number 678 dated 17.07.2001 titled ―Spark Ignition Four-Cycle Engine‖, apart from Harish Chandra, a critical study of the dual versus single plug system in S.I. Engines, SAE technical paper to substantiate its stand of prior publication etc.

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on the patent granted to him, it should be prima facie presumed to be valid until the same is revoked or set aside in the manner known to law either by revocation under any one of the grounds under Section 64 of the Patents Act, 1970 or in any other manner. 

Analysis of Section 13(4).

The court considered the argument of the respondent that the section 13(4) of the Patents Act, 1970 states that the validity of patent is not warranted is in relation to the examination of application for patent and search for anticipation made by the examiner regarding previous publication and prior claim. Further, its looked into what was held by the Hon'ble Supreme Court in Bishwanath Prasad Radhey Shyam v. Hindustan Metal Industries 2, in the following words: It is noteworthy that the grant and sealing of the patent, or the decision rendered by the Controller in the case of opposition, does not guarantee the validity of the patent, which can be challenged before the High Court on various grounds in revocation or infringement proceedings. It is pertinent to note that this position, viz., the validity of a patent is not guaranteed by the grant, is now expressly provided in Section 13(4) of the Patents Act, 1970. In the light of this principle, Mr. Mehta's argument that there is a presumption in favour of the validity of the patent cannot be accepted. The court observed that by virtue of the amended provision of Section 48, even though no presumption of the validity of the patent can be drawn, certainly the patent obtained after the amendment has more significance. However, the onus of proving prima facie case about the validity of the patent and its infringement is still on the plaintiff as it has not been amended by the amendment. Thus, the court accepted that the onus of proving prima facie case was upon the applicants. Therefore, it further proceeds on the basis of the materials available to decide the triple test of an interim injunction (prima facie case; balance of convenience; and inadequacy of compensation). DECISION OF THE COURT After considering the pleadings and various facets of the case, the learned single judge held that the concepts of prima facie case, balance of convenience and inadequacy of damages was in favour of the applicant. The grant of injunction was in favour of the applicant. Thus, the interim injunction was granted in favour of the applicant. APPEAL AND JUDGMENT

2

AIR 1982 SC 1444.

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The interim order was challenged before the Division Bench of the Madras HighCourt, where the appeal was allowed. The appeal finally went before the honourable Supreme Court (Markandey Katju and Ashok Kumar Ganguly JJ.), through the Special Leave Petition. In the matter before it, the Supreme Court criticized the pendency of the matters relating to the intellectual properties, even at interlocutory stage. The suit for the permanent injunction was also pending before the court. Quashing the order granting the interim injunction to applicants, the Court held the Respondents entitled to sell its product in the market, but maintaining an accurate record of all India and export sales. The Court appointed a receiver for the same. The Court also directed the learned single judge to decide the suit of permanent injunction and directed the Respondents to file written statement in the suit. ANALYSIS OF THE CASE. The case is of utmost importance in the Indian Patent regime. The case has included several tests, evolved in earlier cases. These tests were considered significant in deciding the liabilities of the parties, one who seeks to establish the infringement of its patent and one who seeks to challenge the validity of the patent in question. The learned single judge of the Madras High Court has duly applied the various tests in previous cases to decide the matter. The court has given the right decision to protect the intellectual property of the applicants. Had the interim injunction been denied to the applicant, its market goodwill would have come at stake. But, in my view, the decision of the Supreme Court, quashing the interim injunction granted to the applicants, is not satisfactory. The applicants who strained their nerves to get their invention patented deserve the protection of their patent so as to exclude the others from using the same in unauthorized manner. Also, it has been proved in the Madras High Court that the applicants own the patent and also all the ingredients of a valid invention to be patented. Allowing the respondents to sell their product during the pandency of the suit, will significantly curtail the market share of the applicants. Case Study 6: Pantaloon dragged to court by Shoppers’ Stop and Lifestyle; Westside also contemplates similar action, (July 14th, 2008). Shoppers‘ Stop and Lifestyle have dragged their rival Pantaloon to court as they were miffed with an advertisement issued by the flagship company of Kishore Biyani owned Future Group that offered 10% extra discount to their loyal customers vide an advertisement issued in The 16 | P a g e

Times of India, New Delhi, dated 28th June, 2008. The complainant retailers have accused Pantaloon of trademark violations and unfair business practices, says a Live Mint report. All the three parties operate department store format store chains in lifestyle segment. Even Westside has taken objection to the ad saying, ―We have sent a notice to them to which they have not responded,‖ said Smeeta Neogi, Head (Marketing) Westside. Pantaloon‘s ‗Central‘ mall at Gurgaon had offered 30% discounts to its customers over the weekend. Loyalty card holders of competing retailers like Shopper‘s Stop, Lifestyle and Westside, were lured by Pantaloon by offering an additional 10% discount on select brands of apparel. The advertisement asked such customers to: ‖Present your membership card to avail this offer.‖ Loyalty cardholders are mainstay of business for most retailers. Shoppers‘ Stop has a highly popular loyalty card programme branded ―First Citizen.‖ According to analysts, more than twothirds of Shoppers‘ Stop‘s apparel business is accounted for by its loyal customers. ―They (Pantaloon) are luring my customers by using my name in an unfair manner,‖ said Sandeep Mittal, the lawyer representing for both the petitioners. The Honourable Delhi high court has issued an injunction restraining Pantaloon from using names of its rivals in the ads until the next hearing in the matter fixed for 31st July. Taking potshots at these competitors is not new for Pantaloon. Last year, it‘s Big Bazaar chain had put up hoardings, asking customers to ―Keep West-aSide,‖ ―Shoppers! Stop‖ and ―Change Your Lifestyle. Make a Smart Choice.‖ Conclusion Protection of Intellectual Properties is a very critical element in the offshore business model. There have been many cases where companies have lost their position in the market due to the loss of intellectual property. Understanding the country‘s IP Rights and following the best practices described in this paper can drastically reduce the risk of loosing the company‘s intellectual property. Commitment to protect the intellectual property of a company should be developed and nurtured at all levels of the organization. Case Study 7: NAPSTER A small Internet start- up company, founded in May 1999 by a 19-year old college dropout Shawn Fanning, revolved around a program which builds communities around types of music. Since going on-line in September 1999, the Napster site has raised $15 million in venture funding, attracted over 20 million users, and facilitated the download of over 1400 songs per 17 | P a g e

minute. In 1999, several major recording labels filed an action seeking damages and injunctive relief against Napster. Napster was not sued for direct infringement, due to the fact that the technology did not directly copy files on to its central server but merely allowed peerto- peer sharing. Instead, it was claimed by the recording industry that Napster‘s peer-to-peer file-sharing technology and Internet directory service made Napster contributorily and vicariously liable for its users‘ alleged copyright infringement. Napster raised an assortment of defences for its conduct, including the fair use defence on the part of Napster users, including the Sony defence; the AHRA non-commercial user exceptions; the "safe-harbour" defence provided under the DMCA. The Napster network allows music aficionados to, inter alia, make MP3 music files stored on individual computer hard drives available for copying by other Napster users; search for MP3 music files stored on other users' computers; and transfer exact copies of the contents of other users' MP3 files from one computer to another via the Internet. Napster's "peer-to-peer" architecture replaces the traditional method of using large centralised information servers to supply the requested files. Important factors in considering the technology are: Napster servers do not create, copy, store or make available any of the MP3 files on its servers (whether transient or otherwise); the contents of all MP3 files are held at all times on the users' computers; the contents of the MP3 files are not routed or transmitted through Napster‘s servers; Napster merely holds a database of MP3 file names and, if requested, the IP address information of each user. It is difficult to definitively categorise Napster: it can simultaneously be viewed as a service provider, a search engine, and a provider of information location tools such as directories or indexes. Direct Infringement by Napster Users In order to prove that Napster was liable for contributory and vicarious copyright infringement, the industry had to prove that Napster users themselves were actively engaged in the unauthorised reproduction and distribution of copyrighted works. In order to counter this claim, Napster had to prove that all or some of the activities indulged in by its users exempted them from the charge of direct infringement, under the fair use defence, and if this is the case, Napster itself could not be held liable. The district court held that the recording industry had presented a prima facie case of direct infringement by Napster users. In doing so, it accepted the industry's claim that more than eighty percent of the files available on Napster may have been copyright protected and owned or administered by plaintiffs, thereby violating the plaintiff's exclusive rights of reproduction and distribution under §106, U.S. Copyright Act.21 The Court of Appeal found nothing wrong in the district court's finding and Napster did not further argue this point. It instead relied on the fair use defence and claimed that it could avail itself of the "safe harbour" provisions under the DMCA.

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Conclusion The technology does not enable Napster to determine whether this is an infringing file or not except by downloading and listening to all songs which appear to have potentially suspect file names on its servers. This confirms the fact that file names, per se, do not identify the artist or the song title, or whether the music is from a CD (in which event the Plaintiff recording companies may own the rights) or a recording of a live concert (which many artists allow to be freely circulated for promotional reasons). Moreover, programs such as Aimster allow users to circumvent Napster filters by automatically transcribing copyrighted song titles into Pig Latin.30 Even the District Court agreed that it would be too "burdensome or even impossible to identify all of the copyrighted music they own‖; instead, the court, in reliance on previous case-law, held that knowledge need not relate to "specific acts of infringement". Case Study 8: Design Protection and Fashion Industry: Trade Dress: Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205 (2000) Samara sues Wal-Mart alleging trade dress infringement and copyright infringement. Jury finds that Samara‘s trade dress is inherently distinctive and that Wal-Mart infringed Samara‘s trade dress rights. Second Circuit affirms but finds that trade dress must be defined with specificity to fashion a suitable injunction. Ultimately, the Court defines the trade dress as: ―The protected trade dress will include most if not all of the following elements: seersucker fabric used exclusively; two or three identically shaped and symmetrically placed cloth appliqués (not screen printed) substantially similar to appliqués displaced on Samara clothing in vibrant colors integrated into the collar (which is typically large and white), collar line and/or pocket(s) (if any), single-piece, full-cut bodies; and the absence of three dimensional features, outlines and words. Essential to the 'Samara Look' is the method by which the design elements are combined on the garments. It is that amalgamation of the elements, . . . 'a distinctive combination of ingredients,' which creates the uniform, protectable Samara look. . . . In particular, the placement of the appliqués, typically a row of two or three, along the collar or collar line of the garment and on any pockets is essential to the look." U.S. Supreme Court holds that product design could (and should) never be inherently distinctive, but that secondary meaning must be shown. The Court states: ―In the case of product design, as in the case of color, we think consumer predisposition to equate the feature with the source does not exist. Consumers are aware of the reality that, almost 19 | P a g e

invariably, even the most unusual of product designs-such as a cocktail shaker shaped like a penguin-is intended not to identify the source, but to render the product itself more useful or more appealing.‖ Accordingly, in order to protect trade dress in product design, it must be shown that consumers regard the design feature as indicating source. But . . . Samara can enforce copyright in appliqués.

The interpretation Regarding product-design and product-packaging trade dress, the Wal-Mart ruling said courts should classify ambiguous trade dress as product design, rather than product-packaging. At the same time, however, it said that in Two Pesos, the trade dress under consideration was the décor of a restaurant, which did not constitute product design. It could be either product packaging, which the consumer normally thinks indicates origin, or else some tertium quid that is akin to product packaging. Case Study 9: Industrial Design The Honda case – Injunctive Relief in Industrial Design and Three Dimensional Copyright in Malaysia 3 November 2006 (MIP WEEK)

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The High Court in Malaysia has delivered an important decision on the various issues pertaining to copyright and industrial design with special reference to an application for an interlocutory injunction. In Honda Giken Kogyo Kabushiki Kaisha v Allied Pacific Motor (M) Sdn Bhd & Anor [2005] 3 MLJ 30, the famous Japanese marque for bikes and cars applied for an interlocutory injunction against a local manufacturer of a motorcycles in respect of two models manufactured by them. The first model was known as the COMEL MANJA JMP 125, to which Honda claimed had infringed its industrial design in respect of various designs filed embodying its HONDA WAVE 125 model motorcycle. The next was a claim against the defendants‘ for manufacturing the COMEL MANJA JMP-100 (GS-5) motorcycle, for copyright infringement, on the grounds that the manufacture of the same was infringing the copyright of the design drawings embodying the plaintiff‘s HONDA EX-5 DREAM motorcycle. The key findings of the court on the law was that novelty for industrial designs in Malaysia is local, and thereby the publication or use of the design outside the country prior to registration will not render the design invalid. Industrial Design

The claim brought by Honda was based on several industrial design registrations in Malaysia in respect of a motor scooter, the rear combination lamp, leg shields and handle cover equipped with lights of a motor scooter. These designs pertained to parts of a motorcycle and the vehicle proper embodied in the said HONDA WAVE 125 motorcycle. On the issue of the validity of the design, the court held firstly that once a design has been gazetted, the court will presume that the administrative work gearing towards the registration was duly performed by the Registrar in a regular manner and that all the necessary documentation was filed and that it complied with the legal requirements of the law pertaining to registration. Thereby the registration was valid. This presumption of regularity is not restricted to the question of scrutinizing whether the right forms have been correctly filled or the right fees have been paid, but also extends to the application of the mind when construing whether the design concerned is within the scope of the provisions of the law. Therefore unless there is any evidence to displace it, the court will accept that the registration was regularly carried out. This has the impact of making all industrial designs valid unless proven otherwise notwithstanding there being no substantive examination in Malaysia in respect of industrial designs. As to challenging the issue of validity, the defendants however claimed that the industrial designs concerned were not new as Honda had launched the said WAVE 125 motorcycle earlier in Thailand and so their registration of the industrial design in Malaysia was flawed. The court held that as the defendants had thrown in the challenge, the burden is on them to establish

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invalidity following the English decision of AMP Incorporated v Utilux Proprietary Ltd [1972] RPC 103. On the issue of whether the design was new or not, the court rejected the argument that earlier use in Thailand would defeat novelty in Malaysia. This was as the relevant provision of the Industrial Designs Act states that the design is not considered new if it was disclosed to the public anywhere in Malaysia, or was the subject matter of another application with an earlier priority date. The provision therefore suggests that anything outside the scope of those two variables may be taken to be new and so the ingredient of novelty is obviously territorial. Thereby any search requirement in respect of novelty for industrial designs would need to be limited to within Malaysia only. The court then went on to compare the infringing design with Honda‘s designs by looking at the designs, sketches and pictures as well as comparing the physical product. The court held on a balance of probabilities the defendants‘ COMEL MANJA JMP 125 was an obvious imitation of the Honda‘s WAVE 125 and so there was a serious issue to be tried. Copyright Infringement The court here considered Honda‘s claim that its copyright in the two dimensional drawings and its three dimensional form, embodied in the form of a motorcycle branded under the model of HONDA EX-5 DREAM motorcycle was copied by the defendants in their production of their COMEL MANJA JMP-100 (GS-5) motorcycle. The court then followed the earlier Malaysian decision of Peko Wallsend Operations Ltd v Linatex Process Rubber Bhd & Anor [1993] 1 MLJ 225 that a three dimensional reproduction of a two dimensional drawing was copyright infringement. On the issue of authorship the court found that the works were initially vested on the author, one Mr. Ichiro Koizumi, but as it was made in the course of his employment with Honda R & D Co Ltd, the copyright was deemed transferred to the plaintiff. The court found that the copyright items were created in Japan but were first published in Thailand, but due to the application of the Berne Convention in Malaysia with retroactive effect since 1st October 1990 although the work was first published in Thailand it would be entitled to copyright protection in Malaysia. The court proceeded to go through the documents supporting Honda‘s copyright, which consisted of a document that confirmed that the said Mr. Ichiro Koizumi who conceptualized and designed the HONDA EX-5 DREAM was employed by Honda R & D Co Ltd and the assignment from Honda R & D Co Ltd to Honda Motor Co Ltd. The court then went on to compare the defendants‘ COMEL MANJA JMP–100(GS-5) motorcycle with the Honda‘s EX-5 DREAM motorcycle and found that there was substantial reproduction of the design drawings in direct contravention of the plaintiff‘s rights. 22 | P a g e

There was therefore a serious issue to be tried and the court went on to consider whether an interim injunction ought to be granted which the court held was to be underlined by the elements of justice. Interim Injunction Injunction on the industrial design With respect to the infringement of the registered design in respect of the Honda‘s WAVE 125, the court decided that despite the finding of facts and the troubling similarities with the industrial design there were several factors that militated against the granting of an interim injunction. The main factor was that although Honda had their design registered on 7th December 2000, they never launched their HONDA WAVE 125 motorcycle in Malaysia, in fact even when the application for interim injunction was filed on 17 May 2004, it was still yet to be launched. This is to be contrasted to the defendants‘ position where they were well ahead and had created a niche market for themselves by the production of the COMEL MANJA 125 motorcycle. Therefore if the interim injunction is granted there will be serious ramifications and financial and social consequences. This was because there were factories running, workers being employed as well as contracts with various third parties being entered into. This is to be contrasted with Honda‘s position where it still had yet to launch its HONDA WAVE 125 and so would suffer only minimal losses. A further ground for not granting the injunction was that the Court found that there was another registered design owned by a sister company of the defendants on which the defendants claimed that their design was based on. In view of the fact that a design that is registered is considered to be prima facie valid, the fact that there was another design that could be in issue threw into some doubt the infringement by the defendants of the plaintiff‘s industrial design. This thereby affected the certainty of the plaintiff being successful in the main case. Injunction on the copyright infringement As to the injunction against the defendants‘ COMEL MANJA for copyright infringement, the court found that the HONDA EX-5 was available in Malaysia for many years and was Honda‘s best selling motorcycle. The court held that the fact it was Honda‘s best selling motorcycle despite the defendants‘ product being available in the market militated against granting the injunction. This was because it appeared that the defendants‘ product posed no threat to it. Again the court felt the defendants‘ business will be destroyed beyond repair by the injunction and since the defendants were not impoverished companies, damages will be an adequate remedy. Conclusion It appears that the court has taken a view that once a party has substantial operations it will be reluctant to grant an interlocutory injunction against it and leave the matter to be decided at trial. 23 | P a g e

This is as the interim injunction may cause serious economic dislocation and the court may be reluctant to do this without liability being properly established at a full trial. Therefore although a party may have a strong case, the ultimate assessment of the balance of convenience is important and thereby it is imperative that parties enforce their intellectual property rights in a timely fashion and not let the defendant get into an entrenched position.

Case Study 10: Bradford v. Sahara TV Romance novelist Barbara Taylor Bradford was surprised to learn that one of her best selling books, A Woman of Substance, was being made into a 260-part television series in India, Karishma – Miracles of Destin. Bradford did not receive any payment, nor had she authorized the television series. A Woman of Substance is a rags-to-riches story chronicling a woman‘s rise from a servant to the head of an international corporation. Karishma – Miracles of Destiny is a rags-to-riches story chronicling a woman‘s rise from a street sweeper to the head of an international corporation. Both are told from the point of view of the main character, an old woman looking back on her life. Karishma is the most expensive series produced for Indian television, costing nearly 600 million Rupees ($13 million U.S.). Bradford, offended by the unauthorized use of her work, flew to India and filed suit in the Kolkata High Court in early May of 2003.154 Judge Pinaki Chandra Ghosh issued an ad interim injunction against Sahara Media Entertainment, the network set to air Karishma. Sahara appealed the decision, citing the incredible amount of money already invested in the project and the fact that Bradford had earlier filed a similar suit in the Mumbai High Court. On May 12, the very day on which the series was set to premiere, Justices A.K. Ganguly and D.P. Sengupta, sitting on the division of plagiarism. As mentioned above, Indian copyright law protects expressions, not ideas. Upon reading a summary of Bradford‘s novel and listening to the evidence presented, Justice A.N. Roy said, ―In [the court‘s] opinion, this is just an idea. The plaintiff cannot have a monopoly on a woman making it from rags to riches.‖ The Court fined Bradford about $30,000 U.S. ($3,000 for every week that the show was delayed) and ordered her to pay Sahara‘s court costs. Bradford again appealed to the Supreme Court. On August 4, the Supreme Court upheld the lower court‘s substantive decision but reversed its damage award. Although Bradford was unsuccessful in her copyright infringement claim, the case is momentous because it represents one of the few times the Indian entertainment industry has been sued for its alleged plagiarism. Analysis As a result of international agreements like the Berne Convention and TRIPS, domestic copyright laws are generally uniform and offer a high level of de jure copyright protection.168

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As discussed earlier, Indian law has provisions for protecting IPR that comply with international standards . Inadequate enforcement of these laws remains the primary problem for India. The first and easiest answer to this is that Hollywood studios have yet to enforce their copyrights against Bollywood studios. The Bradford case, however, garnered a great deal of legal and media attention. There is a greater possibility that people will seek to enforce their copyrights internationally. India have become a global village. Nobody in the past knew what was going on in India but now with websites and the Internet,‖ it is much easier to discover. Once a H o l l y w o o d studio becomes aware of Bollywood taking ―inspiration‖ from one of its films, can the studio enforce its copyright against a cultural copy.

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