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Sponsored discussion: Protecting trademarks in India’s growing market

India is an exciting and challenging jurisdiction for brand owners looking to enter this rapidly growing market. From parallel imports to accession to the Madrid Protocol, legal professionals from Lex Orbis and Jindal Global Law School give an update on the major developments and tips on navigating these changes.

What is the status of parallel imports in India?

Amaya Singh: Currently, India recognizes the international exhaustion of trademark rights.

Section 30 (3) of the Trade Marks Act, 1999 deals with the parallel importation of branded goods. It provides that if the branded goods were lawfully acquired then sale of those goods in India will not amount to infringement only for the reason that the registered proprietor of the trademark has not consented. However, there are certain exceptions to this, such as when the condition of the goods are changed or impaired after those goods have been put up for sale in the market.

Srinjoy Banerjee: These provisions were tested last year in Samsung Electronics vs. Kapil Wadhwa before the Delhi High Court. Kapil Wadhwa was an erstwhile dealer of Samsung printers in India and was importing and selling genuine Samsung printers intended for other markets from other sources.

Samsung claimed before the Delhi High Court that the defendant’s activities amounted to infringement of its registered trademarks in India, while the defendant argued that its actions were lawful in view of the exemption legislated under Section 30(3). The single judge rejected this argument and held that import of a trademarked product into India, by a person other than the registered proprietor amounts to infringement of the said trademark.

The defendant appealed to the Division Bench of the Delhi High Court, which reversed the ruling by the single judge. The Division Bench clarified ambiguity regarding parallel importation of goods and held that parallel importation is authorized under Indian trademark laws and does not infringe the trademark rights of the rights holder. The Division Bench held that the single judge erred to conclude that import of goods into India needed the consent of the registered trademark owner. The Division Bench recognized that the import of non-infringing goods, legitimately purchased and brought into the country, would not amount to infringement. The Division Bench based its judgment on the basis that under the Trade Marks Act, 1999, “use” of a mark includes import. Further, the judgment concludes that the rights under Trade Marks Act are subject to international exhaustion.

What issues do you see if Samsung appeals the case?

Meenu Maheswar: Samsung moved for appeal January of this year and the case is now on appeal before the Supreme Court. The main challenge for Samsung appears to be re-examining the regime of exhaustion of rights in India under existing Trademark Laws. This decision shall set the position and aid clarity to where the law on parallel imports is moving forward.

Arpan Banerjee: The Supreme Court’s interpretation of section 30(3) will be crucial. Justice Manmohan Singh, the single judge who rendered the first Delhi High Court decision, had narrowly interpreted the term ‘market’ to mean the domestic market. The judge tried to follow the rationale found in laws of other countries.

On appeal, the Court observed that the foreign statues that Justice Singh had referred to clearly distinguished between international and national exhaustion, unlike the broad wording of section 30(3). Therefore, it was wrong to import their meaning in India. The Court also thought that the legislative intent behind section 30(3) did not support Justice Singh’s interpretation.

Naturally, Samsung will try to argue that Justice Singh’s interpretation of the section is the correct one. There could also be much nit-picking over section 30(4), which states that section 30(3) “shall not apply where there exists legitimate reasons for the proprietor to oppose further dealings in the goods, in particular, where the condition of the goods has been changed or impaired after they have been put on the market”. While Samsung may find it hard to argue that the condition of the goods has been changed or impaired, it could point to the term “in particular” to argue that there are other “legitimate reasons” why the imports should not be permitted.

What can rights holders do to prevent parallel imports? Are there other laws that they can rely on?

AS: After the decision of the Division Bench in Samsung, there are not many ways to stop parallel imports. Customs authorities are now seeking a declaration from the brand owners stating whether the imported goods in question are genuine or not. In case the import consignment consists of genuine goods, the shipment will not be stopped even if the importer brought the goods in India without the consent of the brand owner. The only possibility to stop sale of such “grey market” products in India is to take recourse under Section 30(4) of the Act where there is change in the condition of the goods, or if the goods are mutilated or impaired and not fit for consumption in India and similar such grounds.

India recently acceded to the Madrid Protocol. How will this change affect rights holders?

SB: The Madrid Protocol has been in the pipeline for quite some time now. India agreed to accede to the Protocol as far back as 2007, and since then has been working to prepare for Madrid. The Trade Marks (Amendment) Act, 2010 added Chapter IV A, entitled “Special provisions relating to protection of trademarks through international registration”, while the Trade Marks (Amendment) Rules, 2012 made the necessary changes to the implementing Rules.

Apart from legislative actions, the Trade Marks Registry has also made important changes, including the creation of the electronic filing system required by Madrid. All these systems are expected to be operational when the Madrid Protocol comes into force on July 8, 2013.

MM: The Madrid system should likely be a positive for rights holders. The greatest advantage of Madrid is that it provides a single window to trademark offices across the world. The system also offers cost effectiveness to its users, allowing them to file a single application in one language with a single set of fees.

Small and medium-sized enterprises are expected to take advantage of the Madrid system. Owing to the kind of access that it provides to various jurisdictions, cost effectiveness, and its one-stop nature, it appears that the system will work in coherence with the considerations of the SMEs.

Large rights holders should also take advantage of the system. Since the Madrid System allows designation of India with no time limit, all rights holders having business interests in India are free to designate India to their Madrid application/registration.

Another advantage to right holders is that they are more likely to have their mark granted as early as 18 months, unless an opposition proceeding delays the grant.

For international right holders, Madrid will allow them to designate India onto their pre-existing Madrid applications, and does not impose any time limit to do so. This would come as a great advantage to those who have not registered their marks in India but are likely to do so shortly. The impact of such later designation may also have an import during examination or any opposition proceedings, since international registrations are taken into account while determining the strength of a mark and whether the same would qualify to be internationally well-known.

The Financial Times trademark dispute has grabbed headlines all over the world. What significance does this case have for rights holders?

AS: Yes you are right; the dispute over the mark Financial Times has been before Indian courts for almost two decades.

The trouble surfaced when Financial Times London (FTL) received government permission to publish facsimile editions in India under the titles “Financial Times Facsimile” and “FT Weekend Facsimile”. FTL and its subsidiary Indian company also obtained title clearance from the Registrar of Newspapers under the Press & Registrations of Books Act.

When this happened, the Indian company Times Publishing House (TPH) filed suit against FTL claiming infringement of its registered trademarks Financial Times and FT in India in Class 16. In response, FTL claimed that it had used the marks in India since 1945 and had registered them. Both the parties also filed cancellation actions seeking removal of each other’s marks.

The Intellectual Property Appellate Board (IPAB) removed the FTL’s marks from the Register, holding that FTL failed to prove use of the mark in India since 1948 as claimed. The IPAB held that the evidence provided proved the use of the marks in India since 1981, but not before that. The IPAB also held that FTL’s evidence proves that its marks have acquired transborder reputation in India and also FTL’s intention to enter into the Indian market. But since the question before the IPAB was also to consider non-use as claimed by the Times of India Company, it ruled for removal of FTL’s marks.

At the same time, the IPAB also removed TPH’s marks, holding that since the Times Group Company and FTL were in the same business, the Times Group would have been aware of the existence of FTL and its circulation in India.

In its decision, the IPAB focused on the “use” of a trademark. The Board held that the scope of use must be such that it is construed to be actual use, and not mere reference to the mark. Furthermore, the decision reinforces that right holders must corroborate use of a trademark through cogent evidence and not by mere references. The IPAB judgment also held that it is not sufficient on the part of right holders to establish transborder reputation in India; sufficient evidence establishing the user claim is also necessary, without which the mark is likely to be cancelled from the Register.

AB: The dispute is an embarrassing reminder of the delays and procedural hurdles that plague the Indian legal system. If the Financial Times eventually triumphs, it will be a pyrrhic victory.

However, to say that Indian laws are incapable of protecting famous trademarks would be giving a dog a bad name and hanging it. Arguably, the Indian law on transborder reputation is more favorable towards foreign traders than UK or US law. In the 1980s, before the Indian economy had liberalized, the Bombay High Court firmly rejected the hard-line English approach in passing off cases, which tends to hold that goodwill is generally localized and cannot transcend borders (Kamal vs. Gillette (1988)). Over the years, several courts have followed suit and protected unregistered marks belonging to foreign traders. There have even been instances where interim injunctions have been granted ex parte to protect marks even well-travelled people in India have never heard of. Contrast this with, say, the failed attempt by ITC to protect its BUKHARA mark in the US.

We must also remember that the Financial Times faltered before the IPAB by failing to show evidence of use of its mark (as opposed to transborder reputation) before the claimed date of 1948. This caused the IPAB to hold that the mark was wrongly remaining on the Register. I think that the IPAB should be appreciated for making a scrupulous distinction between use and reputation. I sympathize with the Financial Times, but the fact is that it committed a faux pas.

What developments have there been concerning geographical indications in India?

SB: The Geographical Indications Registry has recently made all details regarding applications, registrations and other documents easily accessible online for easy public access.

As of March 31, 2013, the GI registry has granted registration to 193 geographical indications, the last one being the logo for Banaras Brocades and Sarees. According to the list of granted GIs as well at the Intellectual Property Office’s Annual Report, the handicrafts industry is the front runner at the GI Registry, with the State of Karnataka being the front runner amongst GI Registrants.

What other developments do you think rights holders need to be aware of?

AB: I think one of the most significant developments that trademark owners should take note of is the recent Delhi High Court case of Star India v. Agarwal. A single judge restrained mobile phone providers from relaying live scores from cricket matches that were being aired live on the plaintiff’s channel. The judge recognized the existence of a stand-alone tort of unfair competition. If the decision is upheld on appeal, it will almost certainly open a Pandora’s Box. We could, for example, witness lawsuits based on ambush marketing, misleading advertising, or use of trademarks that do not amount to infringement or passing off. This reminds me of cases such as English Court of Appeal’s decision in L’Oréal vs. Bellure, where the Court did not find passing off and refused to accept the plaintiff’s contention that “the common law should move on and embrace a tort of unfair competition”.

What advice would you give to an international company looking to enter the Indian market?

MM: The Indian economy is one of the fastest growing economies of the world. Today India is the third largest economy in terms of purchasing power, closely following the United States and China.

The international aspects of intellectual property protection have also assumed increased importance over time. Considering India’s growth and development, acquisition and subsequent enforcement of intellectual property rights in India for an international brand/company is of utmost importance.

By acceding to the Madrid System, India is now one amongst the 90 countries where trademarks can be protected by a single application. Other than developments in the trademark system, any entity looking to protect its intellectual property in India must devise a cohesive scheme of protection including not just also trademarks, but also domain names, copyrights, design rights, and other forms of IP. India, by acceding to TRIPS, is committed to complying with international standards and policy. As a reassuring step, the Intellectual Property Office in India is also taking many steps to support the needs of the right holders, by providing increased access to information and making systemic changes that facilitate ease of prosecution.

About the participants

Srinjoy Banerjee is an Attorney-at law with more than 12 years of experience in all domains of IP Practice,  both on the prosecution and contentious front. Srinjoy in his contentious experience, regularly appears before the IP Office and the IPAB and also represents clients at various Courts of India.

Meenu Maheswar is a lawyer with the Trade Marks Team with over five years of experience in trademark contentious practice as well as prosecution of global  portfolios for several clients. Meenu also actively represents clients  before the Trade Marks Registry and the Appellate Board.

Amaya Singh leads the Trade Marks practice at LexOrbis. With over 8 years of experience as a Trademark attorney, she has acquired expertise in  all areas of national and international filing and prosecution of trademarks. Amaya has also acquired prolific experience in Trade Mark contentious issues and expertise at advising clients on allied areas of trademark enforcement, such as brand protection and domain name acquisition and enforcement.

Arpan Banerjee is Assistant Professor and Executive Director, Centre for Intellectual Property Rights Studies at Jindal Global Law School.

Clarification submitted by Bisman Kaur, Remfry & Sagar, New Delhi (May 20 2013)

Times Publishing House Limited (TPH) obtained registration of the title FINANCIAL TIMES and started publishing a newspaper thereunder. This was challenged by The Financial Times Limited (FTL) in 1993 before the City Civil Court, Bangalore. The court held FTL to be the registered proprietor of the trademark FINANCIAL TIMES but dismissed its claim relinquishing jurisdiction over several critical issues. FTL has preferred an appeal, which is pending adjudication.

The proceedings pertaining to verification of facsimile titles in favour of FTL’s Indian subsidiary is a more recent (2009) leg to the litigation. The said verification was challenged by TPH first by a suit for declaration and permanent injunction before the Delhi High Court, which was later withdrawn and, thereafter, by a Writ before the High Court of Karnataka. Currently, the issue of the Karnataka Court’s jurisdiction is pending adjudication in the Supreme Court.

In separate proceedings pertaining to the validity of FTL’s registration, the Intellectual Property Appellate Board (IPAB) has unambiguously held that the mark FINANCIAL TIMES has come to be associated with FTL and none else. The issues of reputation and use have been independently adjudicated. However, unfortunately, the IPAB while recognizing FTL’s use of the mark FINANCIAL TIMES in India since the year 1952 adopted a hypertechnical approach and removed its registration on the sole ground that use as claimed i.e. since 1948 had not been proved. FTL has filed a Writ against the order of the IPAB before the High Court of Delhi primarily on the ground that the IPAB ought to have exercised its discretion in amending the user claimed and had acted excessively. TPH’s registration for FINANCIAL TIMES as a trade mark was cancelled as the IPAB held that its adoption of the said mark cannot be accepted.

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