Case BriefsHigh Courts


Delhi High Court: In a suit filed seeking permanent injunction restraining the Defendants, their partners or proprietors, principal officers, servants, agents and distributors and all others acting on its behalf, from manufacturing, selling, offering for sale, advertising, directly or indirectly dealing in any manner with products including but not limited to tobacco products, pan masala products, confectionary and/or any other goods and/or services using the mark RAJNI PAAN, RAJNIPAAN, infringing plaintiffs’ trademarks RAJNI, RAJNIGANDHA including trade dress and any other mark deceptively similar, Jyoti Singh, J., held that defendants are guilty of infringement by dishonestly adopting nearly identical trademark and identical packaging, trade-dress, etc., and have chosen to deliberately stay away from the proceedings, despite service, for which repeated efforts had been made by the Plaintiffs.

It is the case of the Plaintiffs that they are a part of the Dharampal Satyapal Group (DS Group), which is a multi-diversified conglomerate, founded in the year 1929 and have a strong presence in high growth sectors such as Food & Beverages, Confectionary, Hospitality, Mouth Fresheners, Pan Masala, Tobacco, Agro Forestry, Rubber Thread and Infrastructure.

The Conflicting marks are as follows:

Plaintiffs label

Defendants label

Counsel for plaintiff submitted that the RAJNIGANDHA products being Plaintiffs’ flagship product and the world’s largest selling premium flavoured pan masala are sold in a unique packaging having a distinct layout, getup and colour scheme.

An ex-parte ad interim injunction has been granted by this Court in favour of the Plaintiffs and against the Defendants vide order dated 29-11-2018. Order sheets indicate that there was no appearance on behalf of Defendants 3 and 4, despite service through several modes, including dasti.

In Dharampal Satyapal Limited v. Suneel Kumar Rajput, 2014 SCC OnLine Del 687, the Court declared the mark “Rajnigandha” as a well-known trademark, under Section 2(1)(zb) r/w Section 2(1)(zg) of the TradeMarks Act, 1999.

The Court noted that the Plaintiffs are registered proprietors of the trademark RAJNIGANDHA and have filed the Certificate of Registration in this regard which is valid and subsisting. No evidence to the contrary has been produced by the Defendants who chose to abstain from the proceedings.

The Court further noted that having analyzed the competing marks and the impugned label/packaging, it is clear that there is deceptive similarity between them as the packaging of the impugned product, has been designed in an identical colour scheme, font and labels, to give an overall look and feel of the Plaintiffs’ products under the RAJNIGANDHA marks, which has been done intentionally to trade off the significant goodwill and reputation of the Plaintiffs in their RAJNIGANDHA marks.

Thus, the Court held that Defendants have mischievously and deliberately adopted a deceptively similar mark and have only replaced ‘GANDHA’ with ‘PAAN’ with an intention to ride upon goodwill and reputation established by the Plaintiffs as the goods are allied and cognate and the triple identity test is satisfied as the trademark is nearly identical and the trade channels are identical with the same consumer base.

[Dharampal Satyapal Limited v. Youssef Anis Mehio, 2022 SCC OnLine Del 3307, decided on 27-09-2022]

Advocates who appeared in this case:

Mr. Pravin Anand, Ms. Vaishali Mittal and Mr. Shivang Sharma, Advocates for plaintiff

Defendants 1 and 2 ex-parte vide order dated 19-09-2022.

Defendants 3 and 4 ex-parte vide order dated 15-07-2019.

Suit decreed qua Defendants 5 and 6 vide order dated 06-02-2019

*Arunima Bose, Editorial Assistant has put this report together.

Case BriefsHigh Courts

Delhi High Court: In a trademark infringement suit filed by a company namely, Impresario Entertainment and Hospitality Pvt Ltd. (‘plaintiff’) running a well-known restaurant, SOCIAL against the offending trademark SOCIAL 75 (‘defendant’), Jyoti Singh J. granted ex parte ad-interim injunction, as the impugned trademark is deceptively similar to the registered trademark of the Plaintiff.

It is the case of the Plaintiff that it is running various well-known restaurants and coffee shops including Smoke House Deli, Salt Water Cafe, Le Kebabiere, The Tasting Room, Prithvi Cafe, Flea Bazar and Social. Plaintiff commenced business in the year 2001 and since then various restaurants have opened under different names including ‘SOCIAL’. Plaintiff is recognized as a provider of high-quality services and is a well-known name in the hospitality industry.

The plaintiff contended that Defendant is the sole proprietor of the restaurant with the offending trademark ‘SOCIAL 75′ in Jamshedpur.

The Point of similarity claimed is as under

1.The trademark ‘SOCIAL’ is copied in its entirety by the Defendant;

2. The trademark ‘SOCIAL 75′ is being represented in color orange by the Defendant, which is identical to the color used by the Plaintiff for representing ‘SOCIAL’;

3. The manner of suffixing the trademark ‘SOCIAL’ with another phrase, in this case being ‘75′ is identical to the Plaintiff’s concept, the only difference being that the Plaintiff prefixes the trademark ‘SOCIAL’ usually with the name of the area in which the restaurant/bar is located;

4. The services provided by the Plaintiff and Defendant are identical and have the same target audience.

The plaintiffs further contended that Plaintiff is a prior adopter and user of the registered trademark ‘SOCIAL’ and its variants and use of the impugned mark by the Defendant amounts to infringement under Section 29 of the Trade Marks Act, 1999. It is clear that the adoption of a deceptively similar trademark by the Defendant is aimed at misrepresenting to the general public that the source of these goods is the Plaintiff.

The Court held that Plaintiff has made out a prima facie case for grant of ex parte ad-interim injunction, as the impugned trademark is deceptively similar to the registered trademark of the Plaintiff and the balance of convenience also lies in favour of the Plaintiff and it is thus, likely to suffer irreparable harm in case the injunction, as prayed for, is not granted.

[Impresario Entertainment and Hospitality Pvt Ltd., v. Social 75, 2022 SCC OnLine Del 2830, decided on 31-08-2022]

Advocates who appeared in this case :

Ms. Shikha Sachdeva, Ms. Mugdha Palsula and Ms. Shreya Das, Advocates, for the Plaintiff.

*Arunima Bose, Editorial Assistant has put this report together.

Delhi High Court
Case BriefsHigh Courts

Delhi High Court: In a suit filed by Sunshine Tea House Pvt Ltd. (‘plaintiff’) for its brand CHAAYOS was seeking permanent injunction restraining infringement of trademark and unauthorized use of trade name etc. relating to the phonetic and ocular similarity between trademarks ‘CHAAYOS’ and ‘CHAIOPS’, Prathiba M Singh J. appointed Mr. Sidharth Chopra (Counsel present in Court) as the Mediator to attempt amicable resolution of disputes between the parties, on finding that there is a possibility of amicable resolution.

The Plaintiff’s brand ‘CHAAYOS’ was established and started operations in the year 2012 and it claims to be the leading chain of Chai Cafes in India operating in various States across the country offering customized Chai in several variants having 200 outlets across the country.

The Defendant adopted the mark ‘CHAIOPS’ for selling tea products through a cafe under the name and style of ‘CHAIOPS’. The case of the Plaintiff is that the Defendant adopted the mark ‘CHAIOPS’ for products and services identical to the Plaintiff’s services and products which is a violation of the Plaintiff’s registered trademark ‘CHAAYOS’.

The parties admitted before the Court that there is no similarity in the device and logo of the parties. The only issue between the parties is regarding the phonetic/ ocular similarity of ‘CHAAYOS’ & ‘CHAIOPS’ marks.

Thus, the Court, realizing a scope of amicable resolution of disputes appointed Counsel Mr. Sidharth Chopra as the mediator. The Court directed the parties to appear before the mediator either virtually or physically.

[Sunshine Teahouse Pvt Ltd. v. MTRM Global Pvt Ltd., 2022 SCC OnLine Del 2831, decided on 06-09-2022]

Advocates who appeared in this case :

Mr. Jayant Mehta, Mr. Ankit Miglani, Ms. Jyoti Nambiar and Ms. Kaveri Rawal, Advocates, for the Plaintiff;

Ms. Swathi Sukumar, Mr. Abhishek Jain, Ms. Sutapa Jana, Ms. Anjali Bisht, Ms. Himangi Kapoor and Mr. Ritik Raguwanshi, Advocates, for the Defendant.

*Arunima Bose, Editorial Assistant has reported this brief.

Delhi High Court
Case BriefsHigh Courts


Delhi High Court: In a case filed by Livspace Pte. Ltd. (‘plaintiff 1') and Home Interior Designs E-Commerce Private Limited (‘Plaintiff 2') seeking permanent injunction against the domain name on which a website is being hosted, called (‘defendant') where extreme derogatory reviews were written against the plaintiffs which are disparaging and defamatory in nature, Prathiba Singh, J. directed Department of Telecommunications (‘DoT’) and Ministry of Electronics and Information Technology (‘MEITY') to issue blocking orders within 48 hours, and then ensure that the website, shall remain blocked till the next date of hearing.

The plaintiffs claim rights in the mark ‘LIVSPACE' and logo since 2013. Plaintiff 2 is the subsidiary of plaintiff 1 and plaintiff 1 conducts all its business in India through the plaintiff 1. The plaintiffs are also users of the domain name The said mark ‘LIVSPACE' is used in respect of interior designing services, and the plaintiffs claim to offer one of the world's largest interior design and home renovation platforms that connects interior designers, homeowners and vendor.

The Court noted that the present suit highlights the perils of internet-based businesses. The impugned domain name –, is merely one such domain name, which has been registered by an unknown person of whom no details are known. It is not clear as to who has booked the domain name, who has hosted the website, from where the reviews have been collected, and where the content has been developed. None of the details are decipherable from the said website.

The Court further noted that the content is extremely critical of the plaintiffs that could have a serious and deleterious impact on the plaintiffs' business as these are online reviews, for a business that largely operates online. While there can be no doubt that general criticism and review would be permissible in terms of any business, the fact that the entire website, its operations, the persons reviewing, etc., have been totally masked, without any details provided whatsoever, clearly gives the Court the feeling that the same is ingenuine and clandestine.

Thus, the Court observed that while using the trademark ‘LIVSPACE' of the plaintiffs and the trade name, in a surreptitious manner, defendant 1 is intending to cause irreparable harm to the Plaintiffs’ business.

The Court thus directed MEITY and DoT to issue blocking orders against the domain name which has been duly complied with by DoT vide notice dated 01-09-2022.

[Livspace Pte. Ltd. v. Livspace, 2022 SCC OnLine Del 2729, decided on 30-08-2022]

Advocates who appeared in this case :

For plaintiff: Mr. Pranjit Bhattacharya, Advocate

For defendant: Ms. Nidhi Raman, CGSC with Mr. Zubin Singh and Mr. Vinod Tiwari, GP for D-4 & 5.

*Arunima Bose, Editorial Assistant has put this report together.

Case BriefsHigh Courts


Delhi High Court: In a case filed by Tata Sia Airlines (‘plaintiff') seeking decree of permanent injunction against company selling keychains and baggage tags bearing the ‘VISTARA Marks' in the aubergine and gold colour-combination, on a Chinese e-commerce platform, namely AliExpress, by the seller (‘defendant'), Navin Chawla J., raised security concerns of national and international nature at airports due to the infringing material and thus, granted permanent injunction against the infringing defaulter and entitled it to pay Rs. 20 Lakh as damages.

Since their launch in the year 2014, the plaintiff has adopted and extensively used the colour combination of violet (aubergine) and gold as a part of its trade dress, inter alia, as part of its logo; on the uniform of its airline staff; its advertisement panels and its sign-boards/message panels at airports. The plaintiff also issues baggage tags to its crew members which bear the plaintiff’s ‘VISTARA Marks'.

In July 2020, the plaintiff received information about the sale of keychains and baggage tags bearing the ‘VISTARA Marks' which were being sold on a Chinese e-commerce platform, namely AliExpress, by the seller, despite the e-commerce platform being based mostly in China, the website contained several listings by the defendant of infringing baggage tags and keychains bearing the ‘VISTARA Marks' which were eligible for shipping to India.

Thus, the present suit was filed seeking inter alia a decree of permanent injunction restraining the defendant, their associated companies, subsidiaries, directors, wholesalers, distributors, partners or proprietors, its officers, servant and agents from advertising, directly or indirectly offering any goods or services, using or registering corporate names, domain names, or listings on social media platforms as also e-commerce websites which bear the plaintiff’s registered trademarks ‘VISTARA' and/or along with relief against passing off, dilution, tarnishment and unfair competition


Placing reliance on TATA SIA Airlines Limited v. Pilot18 Aviation Book Store, 2019 SCC OnLine Del 9535, the Court noted that the use of the “VISTARA Marks” not only amounts to infringement and passing off of the mark of the plaintiff but would cause dilution of the mark of the plaintiff, further causing deception and confusion in the mind of the unwary consumer.

The Court remarked “Airports are an incredibly critical junction of not only travel but also of trade and commerce; any lapse in security, especially by permitting the sale of vagrantly-infringing goods, would be turning a blind eye to obvious wrongdoings of the defendant.”

Considering the fact that the plaintiff is the registered proprietor of the ‘VISTARA Marks' and none has entered appearance for the defendant, this Court is of the opinion that the defendant has no justification for the adoption of an identical trade mark for sale of their goods.

Reliance was placed on Tata Sons Ltd. v. Manoj Dodia, 2011 SCC OnLine Del 1520 wherein it was held that when a person uses another person’s “well-known trade mark”, he tries to take advantage of the goodwill that such a “well-known trade mark” enjoys. Such an act constitutes unfair competition. It also causes dilution of a “well-known trade mark” as it loses its ability to be unique and distinctively identified and distinguish as one source and consequent change in perception which reduces the market value or selling power of the product bearing the well-known trade mark.

The Court thus granted permanent injunction against the entity selling infringing keychains and baggage tags bearing the ‘VISTARA Marks' and in view of the object and mandate of the Commercial Courts Act, 2015; the Delhi High Court (Original Side) Rules, 2018; and the Delhi High Court Intellectual Property Division Rules, 2022, the plaintiff was held entitled to damages and costs quantified at Rs 20 Lakh (Rupees Twenty Lakh only).

[Tata Sia Airlines Limited v. Shenzhen Coloursplendour Gift Co. Ltd., CS (Comm) 352 of 2020, decided on 31-08-2022]

Advocates who appeared in this case :

Mr. Mukul Kochhar & Mr. Aditya Gupta, Advocates, for the Plaintiff;

None for respondent.

*Arunima Bose, Editorial Assistant has put this report together.

Delhi High Court
Case BriefsHigh Courts

Delhi High Court: In a case relating to two marks being ‘Theobroma’ (‘defendant’) and Theos (‘plaintiff’), based out of Bombay and Delhi respectively and having various disputes pending between the parties, settlement was arrived before Prathiba M Singh J. The parties listed terms of settlement wherein Theo declared recognizing the ownership of Theobroma over the marks in dispute.

Plaintiff 1 and 2 are ‘THEOS FOOD PVT. LTD.‘ or ‘THEOS PATISSERIE & CHOCOLATARIE‘ (hereinafter, ‘Theos’), which are based out of Delhi and Noida, and the Defendant is ‘THEOBROMA FOODS PVT. LTD.‘ (hereinafter, ‘Theobroma’), which is based out of Mumbai, Maharashtra. ‘THEOBROMA’ and ‘THEOS’/ ‘THEOS’ used in respect of bakery related products, patisseries, confectionery etc. The dispute, in the present case, relates to two marks being ‘THEOBROMA’ and ‘THEOS’/‘THEO’S’ used in respect of bakery related products, patisseries, confectionery etc.

There are two proceedings pending between the parties. The said two proceedings are:

  1. The first is a Commercial IP Suit “Theobroma Foods Pvt. Ltd. v. Mr. Karan Narula” pending before Bombay High Court seeking an injunction restraining Theos from using the marks ‘THEOBROMA’, ‘Theobroma’ ‘theobroma’, ‘theo’, ‘Theo’, ‘Theo’s’, ‘Theos’ and various other variant and derivatives thereof, as also, any other mark which is identical or deceptively similar to Theobroma’s marks. The suit stands pending with no relief granted.

  2. The instant suit being the second proceeding was filed seeking permanent injunction restraining Theobroma from infringing the trademark ‘THEOS’, ‘THEO’S’ and ‘THEO’S PATISSERIE & CHOCOLATARIE’, passing off, unfair competition, dilution, blurring, damages, rendition of accounts, and delivery up, and other reliefs.

The instant suit was filed alleging that Theobroma is using the mark ‘THEOS’ as a prefix to the names of various food items being sold in the outlets of Theobroma. However, a perusal of a plaint filed before Bombay High Court shows that Theobroma claims to be the prior adopter and user of the impugned marks. In the year 2004, Theobroma opened its first retail outlet/café next to Cusrow Baug at the iconic Colaba Causeway, Mumbai, under the mark and name ‘THEOBROMA Food of the Gods’. It has acquired immense goodwill and a reputation and has become a household name having total of 81 retail outlets/cafés at Mumbai, New Delhi, Pune, Noida, Bengaluru, amongst others having several trademark registrations in respect of the mark ‘THEOBROMA’ and its variants.

Theos, however, operates a chain of bakeries/restaurants/cafés/lounges under the mark ‘THEOS’/‘THEO’S’ in the Delhi-NCR region having a wide variety of products on its menu such as chocolates, cookies, a wide selection of desserts and cheesecakes, hot/cold beverages among other milk and nonmilk- based products. It was submitted that the mark ‘THEOS’/ ‘THEO’S’ was coined and adopted in the year 2008 and is using the mark continuously and uninterruptedly.

The Court on the last date of the hearing i.e., 08-07-2022 observed that considering the extent of the business and commercial activities of both the parties, an amicable resolution of the disputes between the parties must be explored.

Thus, the parties agreed to settle their disputes in the following terms:

i) Theos recognizes and acknowledges Theobroma as the owner and proprietor of the mark ‘THEOBROMA’. Theos has also agreed not to use the mark or name ‘THEOBROMA’ in any manner whatsoever, either in respect of any products of its manufacture, or sale, or any other services.

ii) Though, Theobroma had initially objected to the use of the mark ‘THEOS’/‘THEO’S’ by Theos, however, in view of the amicable resolution today, Theobroma no longer objects to the use of the mark ‘THEOS’/‘THEO’S’ in respect of its goods and services, as also, as part of its trading style/name ‘Theos Food Pvt. Ltd.’ and ‘Theos Patisserie & Chocolaterie’, so long as Theos restricts its business activities to the Delhi-NCR region.

iii) Insofar as the use of the mark/name ‘THEOS’/‘THEO’S’ in the physical menu cards and signages of Theobroma, as also, on online menu cards and social media of Theobroma is concerned, Theobroma shall restrict such use of the mark ‘THEOS’/‘THEO’S’ only for the following five food items offered by it, along with variants being egg/without egg and sized i.e., pastry slice, per kg. size thereof

1. Theos Dutch Truffle Cake

2. Theos Chocolate Mousse Cup

3. Theos Mava Cake

4. Theos Dense Loaf

5. Theos Quiche

iv) The said usage of the mark, as set out in (iii) above, shall only be in the menu cards used at the physical outlets of Theobroma, and shall not extend to online menu cards of Theobroma.

v) Theos shall also not make any online sales outside Delhi- NCR region under the mark/name ‘THEOS’/‘THEO’S’. If it intends to extend its commercial activities outside the Delhi- NCR region, either in physical or in online mode, the same shall be done under a mark/name which is neither identical nor deceptively similar to ‘THEOBROMA’. Theos, however, is free to use a prefix or a suffix along with ‘THEOS’/‘THEO’S’ for such expansion, so long as the totality of the mark/name which is used for such expansion is not identically or deceptively similar or does not create confusion with ‘THEOBROMA’.

vi) Theobroma shall continue to retain all its trademark registrations for ‘THEOBROMA’ and its registered variants and derivatives, including ‘THEOS’ and ‘THEO’, and shall also be entitled to protect and take all enforcement-related steps and opposition-related actions to safeguard its rights in these names and marks.

vii) Theos shall be free to register its own mark ‘THEOS’/‘THEO’S’ as a word mark or in any logo form thereof, and use the same only in respect of goods and services offered in the Delhi-NCR region. The applications or registrations of the said marks by Theos shall be geographically restricted to the Delhi-NCR region.

viii) Neither party shall oppose each other’s marks or object to the same, in any manner, so long as the same are in compliance with the terms of this settlement.

ix) If Theos receives any requests for online supply or deliveries outside the Delhi-NCR region, the same shall be serviced under a different mark and name, as set out in (v) above. The said mark/name shall not be identical or deceptively similar to ‘THEOBROMA’.

x) Theobroma is free to expand its outlets under the mark/name ‘THEOBROMA’ across the country. However, Theos shall be restrained to the Delhi-NCR region, insofar as its goods and services provided under the mark/name ‘THEOS’/ ‘THEO’S’ are concerned.

Thus, all the disputes between the parties stand resolved, in the terms specified above. The Court thus listed the case for 24-08-2022 for receipt of the settlement application.

[Theos Food Pvt Ltd. V. Theobroma Foods Pvt Ltd., 2022 SCC OnLine Del 2309, decided on 29-07-2022]

Advocates who appeared in this case :

For plaintiff: Mr. Jayant Mehta, Sr. Advocate with Mr. Kapil Wadhwa, Ms. Surya Rajattan and Mr. Abhishek Tiwari, Mr. Srikar, Advocates along with Plaintiff No.3 – Mr. Gaurav Wadhwa and Plaintiff No.4 – Mr. Vikram Narula.

Mr. Rahul Vidhani and Mr. Manoj Menda, Advocates along with Ms. Kamal Messman, Advocates, for the Defendant.

*Arunima Bose, Editorial Assistant has reported this brief.

Kerala High Court
Case BriefsHigh Courts

Kerala High Court: N. Nagresh, J., heard the instant petition wherein the petitioner had approached this Court seeking to set aside rejection letter and to direct the respondent-Asst. Registrar of Companies to process his application for incorporation of LLP without raising any dispute on the proposed name “Reef Wellness and Excellence LLP”.

The petitioner submitted that he had proposed to incorporate a Limited Liability Partnership (LLP) for doing business in Recreation and Wellness Centres, in the name and style “Reef Wellness and Excellence LLP”. Though, he had applied for reserving the proposed name and the name was reserved for the petitioner for three months, he could not make an application for registration of LLP within three months. However, the petitioner submitted an application for incorporation of LLP in the said name on 23-01-2020. Defects in the application were noted by the respondents in installments and the petitioner was made to file fresh applications time and again. However, in none of the mails, the respondent did point out that the proposed name of the LLP was not available. Furthermore, in mail pointing out certain defects, the respondents even stated that the proposed name can be given to the petitioner. Thereafter, the respondent pointed out only one defect relating to Subscribers Sheet.

However, in the end the respondent rejected the application stating that the proposed name of LLP could not be allowed as it is an existing trade mark.

It is evident that an LLP with identical or resembling name is not permitted in view of the regulations made in the Trade Marks Act, 1999. Section 28 of the Act grants an exclusive right to use a trade mark to a registered proprietor of a trade mark only in relation to the goods or services in respect of which the trade mark is registered. Noticeably, the word REEF is now included in the names of entities dealing in Class 05 goods in Fourth Schedule to Trade Marks Rules, 2002. The petitioner had proposed to deal in services and his activity may fall under Classes 44, 35 or 41 which was evident from communication of the respondents.

The Supreme Court had considered the issue of registering similar trade name by different entities for difference classes of products, in Nandhini Delux v. Karnataka Co-operative Milk Producers Federation Limited, AIR 2018 SC 3516, wherein it had held that as the products of the appellant and respondents fall in different classes, there is no question of confusion or deception in the matter of Trade Mark. The Supreme Court stated that,

If a trader or manufacturer actually trades in or manufactures only one or some of the articles coming under a broad classification and such trader or manufacturer has no bonafide intention to trade in or manufacture other goods or articles which also fall under the said broad classification, such trader or  manufacturer should not be permitted to enjoy monopoly in respect of all the articles which may come under the broad classification and by that process preclude the other traders or manufacturers from getting registration of separate and distinct goods which may also be grouped under the broad classification.”

The registration of word mark already granted by the respondents were “REEFLEC’, REEF”, “REEFIT FORTE”, “REEFER (HEMATANIC)” which were all for products falling under Class 05. While the petitioner sought the name “Reef Wellness and Excellence LLP”, not for any product but for a service, and that too which did not fall under Class 05.

Hence, the name proposed by the petitioner could not be said to be identical or deceptively similar. The respondents were not justified in rejecting the application of the petitioner for the reason that the proposed name include the work “REEF” which was existing trade mark under Class 05. Accordingly, the writ petition was allowed and the order of the respondent was set aside. The respondent was directed to incorporate the LLP without raising any dispute on the name proposed by the petitioner.

[Kunhi Muhammed Etayattil v. Registrar of Companies, WP(C). No.3057 of 2021, decided on 07-04-2021]

Kamini Sharma, Editorial Assistant has put this report together 

Appearance before the Court by:

For the Petitioner: Adv. M.P.Shameem Ahamed and Adv. Cyriac Tom

For the Respondents: Adv. P.Vijayakumar and Adv. P. R. Ajith Kumar

Op EdsOP. ED.

1. Intellectual Property Rights is an acronym that hardly needs to be expanded nowadays. Everyone, who matters in scientific circles, is talking about intellectual property rights, and the importance of protecting scientific discoveries, with commercial potential, in a tight maze of patents. Legitimacy of the global intellectual property right system is in question for its inability to generate symmetrical opportunities for traditional knowledge-holders vis-à-vis the inventors and innovators in the formal sector. The status accorded to traditional knowledge and folklore poses particularly profound moral, legal, social and political problems. Such knowledge is not limited to definable or articulate sets of knowable elements. Yet, inter-generational equities could be irreversibly impacted internationally depending on the way solutions to appropriate benefits are structured by vesting ownership or use rights in such knowledge because resource availability and resource use would both be impacted.

2. Liberalisation and globalisation have dramatically altered perceptions about science and its practice in India. The unabashed drive to patent and protect every conceivable scientific advance, no matter how incremental, has now reached a ridiculous level in the West. American and multinational companies, never known for moderation and thoughtfulness, when commercial interests are involved, have set out to fence vast areas of science under the guise of protecting intellectual property. Exponential growth of scientific knowledge, increasing demand for new forms of intellectual property protection as well as access to IP related information, increasing dominance of the new knowledge economy over the old ‘brick and mortar’ economy, complexities linked to IP in traditional knowledge, community knowledge and animate objects, will pose a challenge in setting the new 21st century IP agenda. In the context of trade and business, Trade Related Aspects of the Intellectual Property Rights (TRIPS) and the Convention on Bio-diversity (CBD), respectably, required the creation of new economic rights and obligations to complement the IPR system under World Intellectual Property Organisation (WIPO). Matters concerning traditional knowledge, hitherto pursued only in the form of cultural rights or heritage issues at the UN, UNESCO and WIPO are regarded relevant also for development rights for which the United Nations Conference on Trade and Development (UNCTAD) was created and economic rights for which earlier UN-ECOSOC and more recently, WTO have been mandated. Also, there are certain categories of traditional knowledge like traditional medicine which still are subserving the public health objectives under WHO’s Traditional Medicine Strategy for 2002-2005. Moreover, traditional knowledge is valued not because of antiquity but because more of it is transmitted orally, as part of knowledge necessary to sustain lives and livelihoods and it has an economic value which is variable.


3. Two protective paradigms have been employed to protect traditional knowledge using intellectual property tools. The first protective paradigm seeks to prevent others from using or securing intellectual property rights over traditional knowledge. For example, some communities have created traditional knowledge databases to evidence their traditional knowledge as prior art in order to prevent perceived abuses such as biopiracy. Although traditional knowledge database may pre-empt some from securing rights over traditional knowledge, databases do disclose such traditional knowledge to the public. This becomes a problem since many communities would rather keep such traditional knowledge within their community. Many communities have their own traditional or customary laws that regulate the use of traditional knowledge that may differ substantially from their national system or the international system of intellectual property rights. Disclosure may violate these customs.

4. The second protective paradigm (often called “positive protection”) seeks to secure protective legal rights over traditional knowledge. This is achieved by either using the existing laws or using legislative means to enact new sui generis laws. Some have argued that some countries like the United States may face constitutional problems with granting perpetual rights to these communities. They also raise utilitarian concerns with granting legal rights to traditional knowledge. For instance, some forms of traditional knowledge (such as cures for disease) may be used to help others; and of exclusive rights were granted, some may go upheld. Other concerns deal with the equitable sharing of benefits and resources.

5. Indigenous and local communities have argued that they generally don’t use such incentives to innovate. Their use of knowledge is spiritually and culturally guided. Misappropriation and misuse of this knowledge may violate customary laws that are at the core of their collective and cultural identity. These beliefs are currently protected by a number of constitutional provisions and statutory laws, and are increasingly being recognised as a distinct human right within the United Nations.

Similarly, indigenous and local communities have argued that public claims in their knowledge without their consent amounts to a misappropriation of their identity and heritage, a violation of their fundamental, inalienable and collective human rights.



6. A controversy that can be tagged as a first for India and which rose doubts about strict patent system was the granting of patent to a company, namely, W.R. Grace. The company was granted a patent in the US and the European Union, for a formulation that held the active ingredient in the neem plant in the stable storage of azadirachtin, and the same was planned to be used for its pesticidal properties. It was admitted by the applicant regarding how the pesticidal uses of neem were known and he pointed out to the fact that storing azadirachtin for a longer duration is difficult without the use of neem. The US patent granted, covered a limited invention whereby the applicant was only given the exclusive right to use azadirachtin in the particular storage solution described in -the patent.

The grant of the said patent caused an uproar and it was challenged through re-examination and post-grant opposition proceedings before the United States Patent and Trade Mark Office (USPTO) and the European Patent Office (EPO), respectively. Though there was no success at the USPTO, the European Patent Office ruled in favour of the opposition stating the patent granted, lacked in novelty and inventive step.


7. New experiments are beginning to emerge on benefit-sharing models for indigenous innovation. An example of India is worth sharing. It relates to a medicine which is developed from and based on active ingredients in a plant, Trichopus zeylanicus (Arogyapaacha), found in South-Western part of India. Scientists at the Tropical Botanic Garden and Research Institute (TBGRI) in Kerala learnt of the plant, which is claimed to bolster the immune system and provide the additional energy. The medicine is traditional knowledge used by Kani Tribe. These scientists isolated and tested the ingredient and incorporated it into a compound, which they christened ‘JEEVANI’, the giver of life. The tonic is being manufactured by a major Ayurvedic drug company in Kerala.


8. Two US based Indians, Suman K. Das and Hari Har P. Cohly were granted a US Patent 5,40,504 on 28.03.1995 on use of turmeric in wound healing. The patent was assigned to University of Mississippi Medical Centre, USA. This patent claimed the administration of an effective amount of turmeric through local and oral route to enhance the wound healing process, a novel finding. Any patent, before it is granted, has to fulfil the basic requirements of novelty, non-obviousness and utility. Thus, if the claims have been covered by the relevant published art, then the patent becomes invalid. CSIR could locate 32 references (some of them being more than 100-year-old and in Sankrit, Urdu and Hindi), which showed that this finding was well-known in India prior to filing of this patent. The formal request for re-examination of the patent was filed by CSIR at USPTO on 28.10.1996. On 20.11.1997, the examiner rejected all the claims once again as being anticipated and obvious. The re-examination certificate was issued on this case on 21.04.1998 bringing the re-examination proceedings to a close.



9. Rice Tec Inc. had applied for registration of a mark ‘TEXMATI’ before the UK Trademark Registry. It was successfully opposed by Agricultural and Processed Food Exports Authority (APEDA). One of the documents relied upon by Rice Tec as evidence in support of the registration of the said mark was the US Patent 5,663,484 (hereafter referred to as ‘484 patent’) granted by US Patent Office to Rice Tec on 02.09.1997 and this is how this patent became an issue for contest. The said patent covered 20 claims covering not only a novel rice plant but also various rice lines; resulting plants and grains, seed deposit claims, method for selecting a rice plant for breeding and propagation.

10. In the wake of this controversy, the Government of India set up a Task Force under the Chairmanship of Secretary, Ministry of Industrial Development, to examine the possibilities of filing a re-examination request against the above-mentioned US patent. The Task Force, in turn, set up a technical committee comprising primarily the ICAR and CSIR scientists to examine the patent specification in detail and to collect necessary documentary evidence that may be required to file the re-examination request against the US patent. Evidence from IARI Bulletin was used against Claims 1517. Eventually, a request for re-examination of this patent was filed on 28.04.2000. Soon after filing the re-examination request, Rice Tec chose to withdraw 15 claims and the threat of infringement by the export of Basmati grains to US has been averted. Now, with the surrender of all the other broad claims, even the alleged threat to the export of grains of insensitive rice lines from India has been averted.


11. In this regard, the applicant registered his copyright interest in the book regarding sequence of asanas with the Copyright Office, and then, in 2002 he filed a supplemental registration i.e. a correction filed when the original registration is incorrect or incomplete. According to the said supplemental registration, the applicant was not only claiming rights in the book itself but also on the sequence of 26 asanas taught in the book. An organisation called Open Source Yoga Unity, which, according to its website, is a non-profit collective to ensure the continued natural unfettered development of Yoga, challenged this supplemental registration and asked the US District Court for the Northern District of California to issue a declaratory judgment saying that the applicant could not have exclusive rights over the sequence of asanas as mentioned in the book. However, the said argument was rejected by the Court in 2005, stating that the sequence might be protectable as a compilation. Later, when a question was put to the Copyright Office for its opinion on the said matter, the agency in June 2012 issued its Policy Statement, which concluded that sequences of yoga asanas or any sequence of exercises or movements, excluding choreography, could not be protected as compilations, as they were not compilations of literary works, musical works, or any of the other kinds of works protected by the copyright law.

Within six months, the Policy Statement formed the basis of another court’s decision, when in December 2012, the US District Court for the Central District of California was faced with another dispute over Bikram Yoga. The dispute started when two yoga instructors in Buffalo, New York completed the certification course from the applicant and were authorised by his organisation to teach the basic Yoga system. They formed their own educational enterprise, Evolation Yoga LLC, and opened a series of yoga schools. The applicant sued Evolation Yoga LLCa lleging copyright infringement, however the court granted summary judgment for Evolation, stating that as a matter of law a sequence of yoga asanas cannot be copyrighted.


12. These cases were an eye opener and they triggered the Government of India to create Traditional Knowledge Digital Library (TKDL) and also to include traditional knowledge in the International Patent Clarification System. TKDL is an initiative by India to digitise and document knowledge available in the public domain to facilitate systematic arrangements, dissemination and retrieval of information. While granting patents, authorities check invention to prior art in public domain. Documentation of knowledge will help them trace invention in public domain and help them to know whether it is eligible for patents, thus preventing misappropriation of traditional knowledge.

* Advocate and qualified Chartered Accountant. Author is currently Senior Associate in the Dispute Resolution Practice at L&L Partners Law Offices, New Delhi. Author’s views are personal.

Hot Off The PressNews

The applicants of all Intellectual Property Rights (IPRs) can directly file a Special Leave Petition (SLP) before the Hon’ble Supreme Court against any order of Intellectual Property Appellate Board (IPAB). They can also prefer a writ petition before the High Court against orders of IPAB and IP offices by invoking Article 226 of the Constitution of India and then file SLP before the Supreme Court.

Ministry of Law & Justice only vets the amendments proposed by the concerned Ministry or Department. As provisions for filing SLP directly against orders of IPAB and also against writ petitions disposed of by High Court with respect to orders of IPAB and IP offices are in place and there is no proposal under consideration for such amendment by Department for Promotion of Industry and Internal Trade (DPIIT).

This information was given by the Minister of Commerce and Industry, Piyush Goyal, in a written reply in the Rajya Sabha today.

Foreign LegislationLegislation Updates

G.S.R. 581 (E).—In exercise of the powers conferred by sub-section (1) of Section 156 of the Customs Act, 1962 (52 of 1962), read with clauses (n) and (u) of sub-section (2) of Section 11 of the said Act, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following rules to amend the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, notified by the Government of India in the Ministry of Finance (Department of Revenue), Notification No. 47/2007-CUSTOMS (N.T.), dated the 8th May, 2007, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), vide number G.S.R. 331 (E), dated the 8th May, 2007, except as respects things done or omitted to be done before such amendment, namely:

1 (i) These rules may be called the Intellectual Property Rights (Imported Goods) Enforcement Amendment Rules, 2018.

(ii) They shall come into force on the date of their publication in the Official Gazette.

2. In the said rules,

(A) in Rule 2, –

(i) in clause (b), the words and figures “patent as defined in the Patents Act, 1970,” shall be omitted;

(ii) in clause (c), the words and figures “the Patents Act, 1970,” shall be omitted;

(B) in Rule 5, after condition (b), the following conditions shall be inserted, namely:

“(c) the right holder or his authorised representative shall inform the Commissioner of Customs at the time of giving notice about any amendment, cancellation, suspension, or revocation of the Intellectual Property Right by the authorities under the Intellectual Property Laws or any Court of Law or Appellate Board, subsequent to its registration with the authorities under the Intellectual Property Law and in case of any such amendment, cancellation, suspension or revocation of the Intellectual Property Right during the validity of the notice registered under Rule 4, the same shall be brought to the notice of the Commissioner of Customs by the right holder within a period of one month of the date of communication of any such amendment, cancellation, suspension or revocation of the Intellectual Property Right to the right holder or any person authorised by him in this regard;

(d) in the event of any amendment, cancellation, suspension or revocation of the Intellectual Property Right by the authorities under the Intellectual Property Law or by any Court of Law or Appellate Board, the Commissioner of Customs may accordingly amend, suspend or cancel the notice and the corresponding protection.”.

[F. No. 394/04/2018-Cus.(AS)]

Note: The Notification No. 47/2007-CUSTOMS (N.T.), dated the 8th May, 2007, was published in the Gazette of India, Extraordinary, vide number G.S.R. 33l (E), dated the 8th May, 2007.

Ministry of Finance

[Notification No. 56/2018 – Customs (N.T.)]

Op EdsOP. ED.

With globalisation and increasing competition, technological self-reliance has become a necessity. India has always believed in the middle path. It can be traced to the tendency in our cultural milieu to avoid extremes in any thought process. Intellectual property rights (IPR) management is no exception. However, while the law is evolving, the practices are changing even faster.  The companies which traditionally held our hands on technology and supplied us know-how (at a price), have started to see us as a competitor. As a result of which in the recent years there have been several cases filed by Indian companies against other Indian companies demonstrating increasing awareness among the inventors of their rights. At the same time the case for open source technologies has also become quite strong. It is not just in softwares that one ought to be concerned about open source technologies, but even in hard technologies, the Government can incentivise innovators to bring their technologies in public domain. One can hybridise both IP and open source system protection among corporations and other organised sector entities but freedom to copy, improve, and learn from each other at the community level. Open innovation contrasts with the traditional “closed innovation” model employed by the large vertically integrated firms which grew prominent during the twentieth century.[1]

The most closely linked intellectual property relating to the open innovation is patents, and that is where the column focuses on. Most patent jurisdictions in the world were designed keeping in mind the lone inventor who, through the marshaling of extraordinary insight and experimental toil, conceives a novel invention. As a reward, the inventor is given the right to profit from his contributions through personal commercial exploitation. Open innovation suggested that this model can no longer be successful because the growth of alternative models of technology development challenges the competitive advantage of integrated R&D.

Having established that intellectual property rights would often lock horns with the concept of open innovation, this column would like to explore how to manage one’s intellectual property in order to successfully implement an open innovation model.

What justifies an open innovation model?

Having established that the underlying philosophies of open innovation model and patent laws are polar opposites, it is safe to conclude that an open innovation model would be in conflict with existing patent laws. The question that needs to be asked is, what then, justifies the concept of open innovation model. Traditionally, patent doctrines look for a “flash of creative genius” in the invention as in Graham v. John Deere Co. of Kansas City Calmar Inc.[2] But it is largely accepted now that the process of innovation is not random. The creation of new ideas in the modern world often heavily relies on existing ideas and builds on them.

New technologies arose from the intersection of previously unconnected fields. Technology fusion describes the process whereby entirely new technologies, such as electro-mechanical manufacturing equipment, are spawned by the integration of different fields of art. New fields, such as biotechnology and nanotechnology, stem from the integration of existing disciplines.

There are an almost unlimited number of potential recombinations which an innovator may pursue. The process of finding and trying new technical inputs is often referred to as search. Search processes are often characterised as local and distant search. Local searches involve component with which the innovator is familiar. Distant search tap into unfamiliar fields.

An open innovation model need simplifies the distant searches for an innovator. This may help and tap into different solutions for the same problem developed by different entities and make a breakthrough innovation. Such innovations are beyond the abilities of any one firm to envision.

It is easy to see from the above that open innovation model is beneficial in many ways like maximising profit, avoiding unnecessary competition and, to innovate in the intersection of two different fileds of art.

Managing the open innovation model vis-à-vis patent laws

It is well established that traditional patent laws, offering monopoly rights to the innovator, discourage the very idea of open innovation. But the author would like to postulate that if the intellectual property of an innovator firm is managed in an intelligent manner, it would be helpful in developing innovation model, should they choose to do so. By systematically managing the open innovation and patent management processes a firm might optimise the benefits that are to be gained by these two seemingly conflicting systems.

Some of the world’s largest patent-holders (firms like Philips NV, IBM, and Microsoft) have embraced the open innovation model. As an example transformation of Microsoft’s IP strategy due to the increased demand for interoperability of their Linux and Windows systems has encouraged the move. And if we examine the patenting activities of Microsoft, we observe that it does not appear to have reduced its patenting activities in response to this strategic shift. Microsoft has maintained a constant patenting.[3]

Managing the open innovation process

The volatility and the conflict in the open innovation model make it difficult to manage especially in the light of patent laws. The facts that make management difficult are:

  • There are always multiple claim holders who have heterogeneous interests.
  • Open innovation requires openness in the communication and exchange which is not always forthcoming.
  • Joint ownership and management of intellectual property is complicated.

These demand formation of a governance structure that can decide how multiple claims be prioritised. The open innovation model requires an open exchange of communication, but at the same time an understanding of confidentiality. This becomes all the more important due to the sensitive nature acquired by patents with regard to the time and value. Such confidentiality can be achieved by either signing a formal non-disclosure agreement, or by informal means of community norms, trust and implicit corporate culture.

Managing the intellectual property

To foster the open innovation culture without letting go of the advantages brought by the patent laws, firms must be very intelligent in the management of their intellectual property.  This is not to suggest that one circumvent the patent laws but only that firms utilise it in such a way that it provides a harmonious environment for the open innovation model.[4]

First, in competitive field of technology, like pharmaceutical, the importance of earliest filing of a patent cannot be understood. Since patent rights are granted to the first person who files for it, the application must be made at the earliest. Firms wishing to foster an open innovation model must adapt to the existing patent laws. An application must be made at the earliest, even if it is just a provisional application. The pace of the application process must also not be relaxed. The goal is to get the patent granted as fast as possible.[5]

Second, if possible, the patent application should be filed before collaborating with the partner. This helps with the issue of non-confidentiality encountered while entering into an agreement with a partner. Therefore, this issue may be simply solved by filing a provisional application before making a partnership. Although the applicant must make sure, even with a provisional application, that it meets the legal standards set by the rules. This is so because mere filing of a patent application does not guarantee the grant of patent, it must satisfy all the requirements of law. Although it is better to file a complete specification from the very start, the author realises it may not be financially, economically and realistically feasible.[6]

Third, it is very important to refrain from making any public disclosures about the invention at least till the provisional specification has been filed. The need for secrecy in a competitive market must be stressed upon. The firms involved in the transfer of technology should try to avoid publishing any material by themselves, as it would adversely affect their later claims to joint ownership.[7]

Fourth, third party technology-based solutions with staged disclosure can perhaps ease the tension that arises from receiving ideas that are not yet patented or subject of patent application.


Innovation as a process has increasingly become dependent on many factors including external technologies. It has become so saturated that groundbreaking innovations are becoming more prominent in the intersection of two or more technologies rather than in the realm of one. This has led to the increasing need for firms to collaborate among themselves to continue to increase their innovative output. But at the same time the concept of sharing technologies is directly in contrast with the intellectual property regime built in most jurisdictions.

But we can conclude that with proper management of open innovation model and of the intellectual property, a harmonious environment, where both can survive, can be made. This can be achieved by adopting better mechanisms for technology transfer and by adopting proper licensing practices.

Also, it is imperative to speed up the patent application filing process to supplement the open innovation made adequately. Some problems faced by the open innovation model can be directly solved by optimally utilising the patent law. The two systems, though prima facie at loggerheads with each other, are actually beneficial to each other. Open innovation fosters radical innovation and the intellectual property regime helps to design a better open innovation model. Therefore, the two systems share a symbiotic relationship. They aid in each other’s growth, provided that both are managed in an intelligent manner.

*Vaishali Singh is Research Associate, GNLU-Microsoft IPR Chair, Gujarat National Law University.

[1]  Chesbrough, Henry W. (2003), Open Innovation: The New Imperative for Creating and Profiting from Technology, Boston: Harvard Business School Press.

[2]   1966 SCC OnLine US SC 19 : 15 LEd 2d 545 : 383 US 1 (1966).

[3]   Phelps, Marshall and David Kline (2009), Burning the Ships: Intellectual Property and the Transformation of Microsoft.

[4] The Open Innovation Model, © International Chamber of Commerce (ICC), 2014: <>.

[5]    Ibid.

[6]    Ibid.

[7]    Ibid.

Case BriefsHigh Courts

Madras High Court: While relying upon the Supreme Court decision in Midas Hygiene Industries (P) Ltd. v. Sudhir Bhatia, (2004) 3 SCC 90, the Single Bench of K. Kalyanasundaram, J. has observed that an injunction would normally follow in the cases of infringement of  intellectual property rights, especially when the dishonesty qua the defendants was apparent, and a mere delay would not be a ground to deny an order of interim injunction in such cases.

The plaintiffs submitted that the defendants had deliberately copied their registered bottle design, and thereby had caused design infringement and passed off their bottles as that of the plaintiffs. The defendants contended that there was no novelty in the design of the plaintiffs since the curves on the bottles and the vertical projection on the caps were functional features, and similar designs were in public domain even prior to the plaintiffs’ design registration, hence, the design registration was invalid. The defendants also submitted that they had been selling the alleged infringing products from past five years to the knowledge of the plaintiffs, therefore, as per Section 41(g) of the Specific Relief Act, the plaintiffs had acquiesced their right.

The High Court noted that it was an admitted fact that the plaintiffs’ design was registered in 2008, whereas the defendants launched the impugned design only in 2011. Moreover, it was not the case of the defendants that they were prior user of the design. The defendants had also not produced any material to substantiate their submissions that the designs of the plaintiffs were not new and the similar bottled designs had been used previously. Also, since the defendants themselves claimed to be the registered proprietor of similar designs, hence, they could not be permitted to approbate and reprobate as to the registrability of the bottle design. The Court also noted that the utility of the grip of a bottle, or the feature to facilitate the opening of the cap, could also be attained by other design options, therefore, such features could not be considered as “essentially functional”. The Court, thus, concluded that the design of the plaintiffs had been copied and adopted by the defendants, and the plaintiffs had made out a strong prima facie case for the grant of interim injunction. [Dart Industries Inc v. Cello Plastotech, 2017 SCC OnLine Mad 1851, decided on 12.05.2017]

Case BriefsHigh Courts

Delhi High Court: In a case regarding Intellectual Property Rights, the plaintiffs-manufacturer of water purifiers sought protection by obtaining design registrations under the Designs Act, 2000 in respect of the aesthetic appearance of its water purifier systems stated that products covered by the plaintiffs registered designs are being marketed and sold by the defendant through e-commerce platform-Ebay constituting piracy under the Designs Act, 2000 and alleged that Ebay’s action of permitting the defendant to advertise, offer for sale and sell its products too amounts to infringement of the plaintiffs rights under Section 19 of the Designs Act.

The plaintiffs sought relief against Ebay to take down, remove, delist all products infringing the registered designs of the plaintiffs and issue of prohibitory injunction to from allowing products infringing the registered designs of the plaintiffs being offered for sale and sold from their portal. Plaintiffs contended that Ebay being an intermediary had a duty to do due diligence in order to ensure that before posting any information on its computer resources, it is important to satisfy itself that the same does not infringe the intellectual property rights of any person.

Ebay averred referring to Section 79 of the IT Act, 2000 which states that an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him. The Court accepted this contention observing that asking the intermediary e-commerce websites to screen the products they advertise for infringement of IPR would amount to an unreasonable interference with the rights of the intermediary to carry on its business.

The Court held that the intention of the Legislature has been to require the intermediaries to be vigilant and to only declare to all its users its policy and advise them not to host any infringing information on the website of the intermediary and to on receipt of complaint remove the same within 36 hours whereas no requirement of keeping a check upon the nature of products being advertised has been posed by the Legislature and did not pass any such directions to ebay as sought by the plaintiffs. [Kent RO Sytems v. Amit Kotak, 2017 SCC OnLine Del 7201, decided on 18.01.2017]

Case BriefsHigh Courts

Delhi High Court:  Dealing with the question of situs or location of intellectual property rights  in logos, trade marks and brands with reference to the income accruing in India from intangible assets, the Court held that income accruing from the transfer of intangible assets like intellectual property whose owners were not based in India cannot be taxed in India.

The issue related to the transfer of 16 trade marks and Foster’s brand intellectual property of the petitioner, Foster’s Australia Ltd. to SABMiller executed in Australia. By a brand licence agreement executed earlier, Foster’s India Ltd. had been permitted to use 4 trade marks in India. The licensed trade marks continued to remain the absolute property of the petitioner who received royalty and was subjected to withholding tax in India. The petitioner sought an advance ruling from the Authority for Advance Ruling (Income Tax) under Section 245-Q of the Income Tax Act regarding the issue of taxability in India having regard to the provisions of the Income Tax Act, 1961 and the Double Taxation Avoidance Agreement between India and Australia.

The AAR ruled that the income accruing to the applicant from the transfer of its right, title and interest in and to the trade marks and Foster’s brand intellectual property is taxable in India under the Income Tax Act, 1961 on the ground that the subject-matter of assignment/transfer were situate in India.

The petitioner’s plea was that in the case of intangible capital assets the situs thereof has to be determined by the situs of the owner. Because of the nature of an intangible capital asset, the common law principle ‘mobilia sequuntur personam’ had been evolved, whereby a fiction is created to the effect that the situs of an intangible capital asset would be the situs of the owner of that asset. In this backdrop, since the owner of the intangible assets in question was located in Australia, the petitioner, being an Australian company, the intangible assets, which include the intellectual property rights of the petitioner, were also located in Australia. Therefore, the transfer of those assets would not result in any income deemed to have accrued in India and would not be exigible to tax in India. The AAR was of the view that since the intellectual property rights pertain to India, as they were used and nurtured in India and some of them were registered in India, the same had taken roots in India and therefore, were completely situate in India.

Upholding the petitioner’s contention, the Division Bench of Badar Durrez Ahmed and Sanjeev Sachdeva, JJ. observed that in the absence of a specific provision regarding intangible assets, the well-accepted principle of ‘mobilia sequuntur personam’ would have to be followed. The situs of the owner of an intangible asset would be the closest  approximation of the situs of an  intangible asset. This is an internationally accepted rule, unless it is altered by local legislation. Since there is no such alteration in the Indian context, the situs of the trademarks and intellectual property rights, which were assigned pursuant to the ISPA, would not be in India. This is so because the owner thereof was not located in India at the time of the transaction.The Court held that the income accruing to the petitioner from the transfer of its right, title or interest in and to the trademarks in Foster’s brand intellectual property is not taxable in India. [CUB Pty Ltd. (formerly known as Foster’s Australia Ltd.)  v.  Union of India, 2016 SCC OnLine Del 4070, decided on July 25, 2016]