India: IPR Legal Update: Navigating Recent Copyright And Patent Law Developments In India

Novex Communications Pvt Ltd. Vs Trade Wings Hotels Ltd (Commercial Suit No. 264 of 2022) and Phonographic Performance Ltd. V/s Bunglow 9 and 99 Ors. (Commercial Suit No. 363 of 2019)

OVERVIEW

Under the Copyright Act, 1957, Copyright Societies can issue licenses for the use of copyrighted works, enabling them to manage licensing and royalty collection on behalf of copyright owners. Novex and PPL, as licensing entities, sought to enforce their rights against establishments using copyrighted music without proper licenses. Defendants argued that Novex and PPL lacked authority, as they were not recognized as Copyright Societies, raising questions on the legality of their licensing claims.

FACTS

In a recent legal battle, two companies, Novex Communications Pvt Ltd (referred to as 'Novex') and Phonographic Performance Ltd (referred to as 'PPL') (collectively referred to as 'Plaintiffs'), found themselves at odds with various restaurants, hotels, and malls over allegations of copyright infringement.

The crux of the matter lay in the unauthorized usage of sound recordings owned by music labels like Tips, T-series, Eros, etc., which had granted partial rights to Novex and PPL through 'Assignment Agreements' for public communication and licensing.

Novex and PPL sought to enforce their rights through legal action, demanding that the defendants cease using their sound recordings without obtaining proper licenses. They pursued perpetual injunctions, aiming to prohibit the defendants from any further use of these recordings without a valid license.

However, the defendants argued that Novex and PPL lacked the authority to demand royalties, as they were not recognized as Copyright Societies. The defendants cited Section 33(1) of the Copyright Act, asserting that Novex and PPL could not issue licenses without being registered as Copyright Societies. Further, the defendants also contended that Novex and PPL were ineligible for any relief or entitlement to royalties.

This legal dispute sheds light on the intricacies of copyright licenses and provides valuable insights on the role of Copyright Societies and their rights in managing copyrighted material.

ISSUES:

• Can Novex and PPL issue licenses without being registered as a Copyright Society?
• Are Novex and PPL entitled to seek relief without being registered as a Copyright Society?

JUDGEMENT :

After careful consideration of the arguments presented by both parties, the Hon'ble High Court of Bombay ruled in favor of the Plaintiffs. The Court determined that the Assignment Agreement between the Music Labels and Plaintiffs is lawful and valid, rejecting the Defendants' claims to the contrary. It emphasized that the Plaintiffs rightfully own the copyright to the sound recordings, as specified in the agreement.

Furthermore, the Court made a crucial distinction between copyright owners and Copyright Societies. It clarified that Section 33(1) which pertains to Copyright Societies, does not preclude owners from granting licenses for their own work. This interpretation, the Court reasoned, aligns with the intent of Section 30, which empowers owners to license their creations. The purpose of Section 33(1), the Court emphasized, is primarily to regulate Copyright Societies and their licensing activities, rather than restrict owners' rights to license their creations.

The Court underscored that Section 33(1) does not prevent non-members of a copyright society, including copyright owners, from exercising their ownership rights to grant licenses. Therefore, the absence of registration as a copyright society does not impede an owner's ability to license their work. Consequently, the Court affirmed that entities like Novex and PPL possess the authority to grant licenses under Section 30 of the Act.

In conclusion, the Court ruled that Novex and PPL have the legal right to seek relief against unauthorized exploitation of their work by Defendants, even without being registered as Copyright Societies under Section 33(1) of the Act.

UTI Infrastructure Technology and Services Limited v. Extra Tech World and Ors SUIT (L) No. 537 of 2024

OVERVIEW

The Bombay High Court issued an ex-parte interim injunction against entities accused of running counterfeit websites offering PAN card services for UTIITSL. UTIITSL alleged copyright infringement and trademark passing-off, emphasizing its exclusive authorization from the Income Tax Department for PAN services.

FACTS OF THE CASE

The Bombay High Court issued an ex-parte interim injunction against multiple entities accused of operating counterfeit websites purportedly offering PAN card services on behalf of UTI Infrastructure Technology and Services Limited (UTIITSL), a government-owned entity who is the plaintiff in this case. The court emphasized the national significance of PAN services and expressed concern over potential misuse, stating it would be detrimental to the plaintiff and for the national interests. The Plaintiff argued that it holds exclusive authorization from the Income Tax Department for PAN-related services since 2003 and alleged a few unknown entities for infringing the plaintiff's copyright and further passing off its trademarks. They claimed that only the plaintiff (UTIITSL) and Protean eGov Technologies Limited (formerly NSDL eGov), authorized by Tax Department, offered legitimate PAN services. The plaintiff has noticed that the defendants posing to be the unauthorized service agents have also committed fraud since the alleged unauthorized websites might be issuing fake PAN cards, collecting personal data deceptively, and misleading users into payments for fabricated documents.

ISSUE

1. Whether the defendants' act of operating fake websites constituted to copyright infringement and passing off of trademark?

JUDGEMENT

In an ex-parte order, the Bombay High Court directed the takedown of unauthorized websites offering PAN card services, citing potential national threats and irreparable damage to the plaintiff's confidential data.

The Ministry of Commerce and Industry (Department of Promotion of Industry and Internal Trade) proposed certain amendments to the Patent Rules 2003 vide a notification dated 2^nd January 2024. These amendments were open to comments from the public and/or stakeholders.

In August 2023, the Ministry of Commerce and Industry (MoCI), with the aim of doing 'easy of business', notified the Jan Vishwas Act, 2023. This act aimed to revise 42 laws, including the Patents Act, 1970 by decriminalizing criminal penalties for specific offences outlined therein.

Prior to the introduction of the Draft 2^nd Amendment Rules and Jan Vishwas Act, 2023, the misrepresentation of patent rights resulted into a fine of up to Rupees One Lakh. The new amendment however raises the penalty to Rupees Ten Lakhs, with an additional daily fine for continuous misrepresentation. The Jan Vishwas Act further replaced the imprisonment penalties previously stipulated in the Patents Act, 1970 for offences pertaining to i) unauthorized claim of patent rights as provided under Section 120; ii) refusal or failure to supply information to the Central Government of any information which he is required to furnish as provided under Section 122, and iii) the wrongful practice by non-registered patent agents provided under Section 123 of the Patents Act, 1970, with significant fines. Additionally, the Jan Vishwas Act, 2023 introduced the appointment of an adjudicating officer to conduct inquiries and impose penalties, along with the provision to appeal against the decision passed by the Adjudicating Officer.

In order to enact these provisions, The Draft Patent Rules 2024 outlines the process, timelines and fees for filing and adjudicating complaints for the following –

• According to the amended draft rules, now any person may file a complaint directly to the adjudicating officer with regards to any contravention or default committed by any person as under Section 120, 122 or 123 of the Patents Act, 1970 which was not the case in the previous rules. This introduction will streamline the process and hasten the adjudicating process.
• With respect to the above, the draft rules have introduced a new Form for filing complaints, i.e. Form 32. The rules also stipulate that the complaints shall be accompanied by a statement of facts based on which the complaint is relied upon as well as documents serving as an evidence to support the statement. Furthermore, an official fee of Rs.10,000 is required for natural persons, start-ups, small entities, and educational institutions, whereas, the other entities must pay an official fee of Rs.50,000 along with their complaint. This will ensure the genuineness of the complaint and will mitigate the possibility of registration of fake complaints with a motive to hinder the business
• The draft rules have also provided for the adjudication of complaints. According to the amendment, one or more authorized controller/s will serve as adjudicating officers to conduct inquiries and impose penalties for individuals found in default or contravention. In case where multiple adjudicating officers are designated, a computer resource system will automatically and randomly assign complaints filed by the complainant/s to the respective adjudicating authority.
• The draft rules further outlines a process for summary proceedings for managing complaints. Initially, the procedure involves evaluating whether there is a prima facie case present which could support the admissibility of the complaint. If such a case is not established, the complaint will be dismissed. However, if a case supporting the admissibility of the complaint is established, the adjudicating officer will provide a copy of notice to the alleged infringer. The alleged infringer will then be given an opportunity to submit their written submissions against the notice, will be heard and can hear the parties, conduct an inquiry (if deemed necessary) before the final decision is passed.
• In addition to the above, the draft rules also provides for the factors to be considered to determine the threshold of compensation. The includes factors such as –
  
  
  1. The extent of any unfair advantage gained due to the default
  2. The extent of losses incurred by the individuals due to the default
  3. Whether the default is of a repetitive nature
  4. Extension of time period offered.

KS&CO's COMMENTS

Highlights

These proposed amendment rules, however, have been proposed to provide better clarity and optimizing the adjudication process by streamlining it. It also seeks to empower stakeholders by providing them proper procedures, and mitigating legal intricacies to facilitate the effective implementation of the Act. The Department for Promotion of Industry and Internal Trade (DPITT) ought to take into consideration the overall provisions of the Patents Act 1970 and Patents Rules 2003 and not just restrict itself to the Jan Vishwas Act 2023 to fulfil its goal of facilitating better and efficient implementation of law.

Furthermore, the proposed rules establish a separate mechanism for addressing complaints under Sections 120, 122, and 123 of the Patents Act through an Adjudicatory Officer (proposed Rule 107B) and an Appellate Authority (proposed Rule 107E). This is intended to enhance the dispute redressal mechanism in the Intellectual Property Regime.

The draft rules introduce a process for managing complaints, starting with assessing if there's a valid case. If not, the complaint is dismissed. If there is, the alleged infringer gets a notice and a chance to respond in writing, be heard, and participate in an inquiry if needed before a final decision is made. This process ensures fairness and transparency by allowing both parties to present their arguments and evidence before a final decision is made. It helps prevent wrongful dismissals and gives alleged infringers an opportunity to defend themselves effectively, ultimately promoting justice and due process.

Critical observations

The Department for Promotion of Industry and Internal Trade (DPIIT) allowed a thirty-day period for feedback on the new Draft Rules. Initial scrutiny revealed inconsistencies that need rectification. Critical details, such as deadlines for document submission, lack clarity. For instance, it is still unclear if the one-month limit for issuing orders begins from the complaint date or the appointment of the adjudicating officer. The rules heavily rely on the Jan Vishwas Act but overlook other important provisions. They seem to only cover certain offenses under the Patent Act, but does not cover certain sections for instance, Section 124 pertaining to offences by companies. Additionally, clarity is needed on adjudicating offenses under Section 118 (contravention of secrecy provisions relating to certain provisions) and Section 119 (falsification of entries in the register). The designation and qualifications of officials conducting proceedings are also undefined, causing ambiguity. It is suggested that Adjudicatory Officers hold Deputy or Assistant Controller rank, and the Appellate Authority should be at least a Joint Controller.

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