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Freddy R Daruwala, Partner at Nasikwala Law Office analyzes and examines the unique feature of IPR Actions and the extreme importance of interim and interlocutory proceedings in actions for infringement and passing off as compared to other suits.
Albert Einstein once remarked that “What counts can’t always be counted; what can be counted doesn’t always count”.
This statement hits the nail on the head insofar as Intangibles and Intellectual Property Rights (IPR) are concerned since these are becoming the premier asset of any business entity seeking to do business in the present age.
In certain cases the intellectual property may even be so valuable as to exceed the value of the tangible assets of a corporation, as in the case of Coca Cola, Rolls Royce and a host of other corporations. In many cases, the corporations earn a far heftier and steady income from merely licensing their intellectual property than from pursuing their main business, a case in point being that of Texas instruments in USA .
This trend is fast catching on in India and companies which hitherto were ignoring their IP assets are spending large sums in protecting them and taking action against those who seek to appropriate them. A classic instance is the current Trade Mark infringement actions by Wyeth against Sun Pharma in respect of its over the counter and prescription drug trademarks. Even Non-profit organizations like Helpage and Lions International are protecting and safeguarding their IP assets with the zeal of a lioness protecting her cubs.(pun intended)
Importance of interim and interlocutory orders in IPR Suits
An interim order is an order of temporary duration which may even be granted ex parte (on the application of the plaintiff without the defendant being present). These orders are sought very quickly when action is needed to safeguard the rights of a plaintiff and are usually metamorphosed into interlocutory orders if the other party is heard and preliminary matters decided.
Therefore an interlocutory order is one where the parties are heard but the matter is not finalized and generally seeks to preserve the rights of a party or prevent further damage prior to the final decision in a suit.
Interlocutory (and interim) orders are generally granted on the basis of the following questions in the suit:
– Whether the question to be decided on by the court is a serious issue
– Whether on balance of convenience, the party seeking the injunction (by means of interlocutory or interim) order will be seriously prejudiced and monetary damages will not suffice as a means of restitution
– The party seeking an injunction gives an undertaking that if the issue is decided against him, the damages incurred by the other party will be made good
Final orders are generally granted in a case after the matter is heard and decided and generally include one or more of the following
– Account of profits or Damages
– Delivery of Infringing Articles
– Perpetual Injunction
– Declaration/public apology in case of infringement of the moral rights of a Copyright Owner
However since the judicial system, like the proverbial mills of God, grinds out its orders very slowly, absence of an interim or interlocutory order may often mean that before a suit is decided (after 7-10 years) the infringer has already gained a spring board on the market of the IPR holder and the remedy is reduced to an academic one.
On the other hand, an interim or interlocutory order (restraining the defendant) may well mean that the Plaintiff has succeeded in the action, since the defendant, once restrained will not want to wait until the suit is decided and often settles and adopts a different trade mark or enters into a patent/registered Design License agreement (generally as part of a consent decree)
Therefore the importance of interlocutory and interim orders cannot be overstated in IPR Suits and we shall now try and examine certain actions and orders unique to IPR matters. These orders have developed over the course of time in the UK and USA and are increasingly being resorted to by the Indian Courts handling IPR matters.
Types of Unique IPR Actions
Generally IPR actions are mainly civil suits along with certain parallel criminal case filings in case of Trademark and Copyright infringements. It is important to note that there are no criminal proceedings prescribed by the applicable statutes in Patent and Design Infringement disputes. The main actions which are unique to IPR disputes are as follows:
a) Patent and Designs Infringement Suits
Patent and Design Infringement suits are only allowable for cases where a Patent is granted (and sealed under the previous version of the Patents Act 1970). No infringement suit is allowed for a patent or design not so granted
b) Infringement and passing off suits in relation to Trademarks.
Only a Registered Trademark may be the subject of an infringement suit which is a more efficacious remedy for protection of a registered Trade Mark. An Unregistered trademark will have to be enforced in a Passing Off action where the plaintiff will have to prove that the infringer‘s trademark has caused or likely to cause confusion, deception and damage to the registered proprietor of the mark. However for a registered Trademark, the owner may plead infringement and passing off in the same suit.
c) Infringement of Copy Right
A suit for infringement of Copyright would be similar to a trademark infringement suit with the notable difference that a copyright need not be registered to file a Copyright infringement suit. A Copyright Infringement suit is maintainable also for a Device Trade mark (with artwork) or even for the copyright inherent in a design (i.e. a Design that is not registered under the Designs Act, 2000)
d) Criminal complaints for Trademark and Copyright Infringements
Such civil suits in case or Trademarks (infringement and passing off) and Copyright infringement may also be supplemented with criminal complaints
e) Administrative Remedies
In the case of Patent and Trademark matters, the law also permits administrative remedies with the Patents Controller (pre and post grant opposition) or the Trademarks Registrar (opposition, rectification and removal of a trademark) respectively. This in itself is a very large area of IPR practice
f) Quia Timet actions
This is perhaps a unique type of action which is generally resorted to in the case of trademark infringement/passing off suits.”Quia Timet” is a Latin word which means “because he fears or apprehends”. Thus in essence a quia timet action is one where a plaintiff may take a party to court because he fears or apprehends another party will infringe/resort to passing off in the case of his trademark.
The threat of imminent infringement must be real and the party initiating such quia timet action must conclusively prove the following:
-Likelihood of confusion or damage even though the intended goods which infringe are competitive or not
-Whether the trademark attempts to cash in upon the goodwill of the trademark of the plaintiff
-Whether the balance of convenience lies with the plaintiff warranting the grant of an injunction on the basis of a quia timet action
-Whether there is a reasonable probability of tangible damage or injury to the plaintiff coupled a reasonable probability that such infringement will occur
In recent times the Indian case which comes to mind is that of Mars Inc v K K Mukherjee (2003) PTC 60 (Del) where the defendant had adopted the trademark of the plaintiff as a part of its corporate name and trading style even without starting any business. Another notable quia timet action in the UK is that of Marks and Spencer v One in a Million (1998) FSR 265 in respect of the trade mark “St Michael”
Thus it can be seen that quia timet actions are a deterrent in the trafficking of trademarks and generally frown upon parties adopting and usurping a trademark without doing any business. In the author’s view these can also have important implications as a deterrent to cyber squatting which is becoming prevalent as the use of the internet domain names are becoming as important as trademarks in e- commerce.
A final word in case of IPR actions which also needs to be borne in mind is that many IPR statutes, especially the Patent and Trademark legislation, also frown upon frivolous infringement threats and prescribe penalties against the same
Description of some unique orders in IPR actions
The most unique types of Interlocutory orders, granted in IPR suits and generally deriving their names from certain cases in which such orders were first granted, which we shall briefly examine ,are :-
a) Anton Piller Order
This order derives its name from the case of Anton Piller KG v Manufacturing Processes Ltd (1976) 1 All ER 779. It involves the court, on an ex parte application of the plaintiff, permitting the plaintiff and his advocate to search the defendant’s premises and seize any infringing material
As one can see, this is strong medicine against a defendant since it involves the suspension of certain fundamental rights and authorizes the plaintiff to act as a bailiff and remove the infringing goods from the commercial stream. Nevertheless the Indian Courts are increasingly resorting to Anton Pillar Orders or similar variations since it is an effective deterrent to infringement and also in view of the fact that sufficient damages are rarely granted by Courts in India .
b) Delivery Up of Infringing Articles/ Erasure of Trade Mark Order
This is a watered down version of the Anton Pillar Order which stops short of actual search but orders the defendant to deliver up the infringing articles along with erasure of the infringing marks and destruction of the means of affixing it (Drums, Logos, labels etc). It is generally accompanied by an order for verifying that such delivery up/erasure has been effectively carried out.
This type of order as also an Anton Piller Order is generally used in infringement suits where there is blatant prima-facie infringement of the plaintiff’s trade mark and not easily granted in passing off actions
c) Discovery Order
This is a unique order which operates against a party who may not be involved in infringing the plaintiff’s Registered Trade mark. A Discovery Order may compel any person (even one innocent of any infringement) to reveal the names and whereabouts of infringers. The only requisite to such interlocutory order is that the person against whom such an order is passes must have participated in any infringing process (even innocently), like for example making a die in the course of his business for an infringing trade mark. This order is now implicit in the Trade Marks Act 1999 and derives its origins from English Common Law
A discovery order is not resorted to where the liability of the persons whose particulars are sought is in doubt, but is routinely used in cases of counterfeiting
d) Mareeva Injunction
This order one more derives its name from the famous case of Mareeva Campania Naviera S A v International Bulk Carriers S A. The essence of a Mareeva injunction is that the court restrains a defendant from removing his assets from a particular jurisdiction or otherwise dealing with them such that the plaintiff’s access to such assets in the event of a successful infringement suit is jeopardized. In the above case, the court ordered the ship S S Mareeva from sailing out of its jurisdiction, when it was proved that its cargo comprised of infringing goods.
Such an order is routinely resorted to in counterfeiting cases where the defendants rarely cough up damages and may also be coupled with discovery and Anton Piller Orders.
e) John Doe Order
A John Doe order, like a discovery order discussed above, is an order which restrains any party in doing the action specified in the order. This order is also referred as a “Rolling Anton Piller” order since it is against unspecified defendants. This order is generally awarded to a plaintiff when it is not ascertainable who will actually carry out the infringing act, though the probability of an infringement is very high.
A John Doe order was granted by the UK Courts to the publisher Bloomsbury in respect of the Harry Potter book “Harry Potter and the Order of the Phoenix” where any person was prohibited from releasing any part of the contents of the book prior to its official release.
More recently in January 2009, in the case of Ardath Tobacco Company v Munna Bhai & Ors, the Delhi High Court granted a John Doe Order to the plaintiff, the manufacturers of the famous cigarette brand “State Express “555”. This order is unique in the sense that it considers the ground reality of cigarette retail by the individual stick by small panwallas where the pack may not be visible to a buyer of a single stick. The order therefore restrains any person from dealing in the infringing cigarettes where the pack is deceptively similar to the well known State Express 555 brand.
With the grant of this John Doe Order by an Indian Court, one can certainly say that Indian IPR jurisprudence has come up to speed with respect to its western Counterparts.
In more recent times a John Doe Order was granted to Viacom Media for the movie ”Gangs of Wasseypur” whereby ISPs were restrained from giving access to certain sites where movies were downloadable. However The Madras High court has granted some relief to the ISPs. This is perhaps an indication that there is “IPR awareness” in India in respect of John Doe Orders and that the same are contestable.
The above exposition deals with the subject at a very preliminary level and only wishes to make the reader aware of the unique issues and importance of the interlocutory orders in IPR actions vis a vis normal actions. With IPR protection and enforcement gaining ground in India and tougher laws being enacted especially by the states (Tamil Nadu Act and Maharashtra’s Anti Piracy Bills for example) to combat the evils of book and film piracy, one can certainly expect that Indian Courts will resort to the use of these orders and their various variants in times to come. Coupled with the fact that IPR is increasingly becoming the asset of choice in a business, its protection becomes a key issue to the very survival of that business.
Freddy R Daruwala, a dual qualified Lawyer and CA, is a Tax Partner Nasikwala Law Office. He can be contacted at email@example.com