On 16th May, 2014, in the case Tekla Corporation v. Survo Ghosh, Justice Endlaw of the Delhi High Court held that ‘copyright misuse’ does not constitute a legitimate defense for copyright infringement in India. In this post, I analyse the decision in Tekla Corporation in light of how the doctrine of copyright misuse is evolving in the USA.
The judgment does not delve into the facts in detail. What can be gleaned is that the plaintiffs Tekla Corporation, Finland and Tekla India Pvt. Ltd. claimed to have a copyright in a software programme known as Tekla Structures. They brought a suit against the defendant for installing the software without the authorization of the plaintiffs.
The defendants, instead of relying on the usual defenses codified in the Indian Copyright Act, claimed that their actions did not constitute infringement as the terms of the copyright license such as bundled maintenance service agreements and training fee, exorbitant penalties, etc constituted Misuse of copyright by the plaintiffs. Misuse of copyright occurs when the copyright owner attempts to use their exclusive rights to gain more protection than what is contemplated by the law (read more about the doctrine of copyright misuse here). It was admitted by the defendants that this defense does not exist in the Indian Copyright Act, but they claimed that it was an equitable defense that can still be considered by the Court.
The Decision
The Court, however, failed to see merit in the defendant’s contention. The following reasons were cited by the Court:
1) Section 52 of the Copyright Act provides an exhaustive list of defenses, and nothing outside the ambit of Section 52 can constitute a valid defense.
2) Even if Copyright Misuse were considered to be an equitable remedy, the doctrine of clean hands bars such a remedy in the present case as the defendant committed the offence of copyright infringement. Further, when there is conflict between law and equity, law will prevail over equity.
3) Acceptance of the doctrine of misuse of copyright would “tantamount to allowing a person to unilaterally decide that the owner has lost the copyright for the reason of misuse thereof and to thereby usurp the rights otherwise exclusively vested in the owner” .
4) “Negative equality” cannot be pleaded as a defense to an action, that is, a wrong done to the plaintiff cannot be set-off by a wrong done by the plaintiff, or “illegality would not provide a sound basis for commission of another illegality”.
The Doctrine of Copyright Misuse in American Jurisprudence
The defendants had argued the defense of copyright misuse based on five Court of Appeals decisions delivered in the USA. While the doctrine of patent misuse has been around in US jurisprudence (and is absent in Indian jurisprudence), Copyright Misuse was expressly laid down in Lasercomb America v. Reynolds. Lasercomb’s license agreement stipulated that no user of Lasercomb’s program can develop a competitive program for 99 years, which was far longer than the period of subsistence of Lasercomb’s copyright, which was only 75 years. The Court of Appeals found that this was an anti-competitive misuse of copyright, thereby denying Lasercomb the right to sue Reynolds for infringement. The Court in Lasercomb said that copyright misuse is broader than mere violation of antitrust laws, holding that “[t]he question is not whether the copyright is being used in a manner violative of antitrust law . . . but whether the copyright is being used in a manner violative of the public policy embodied in the grant of a copyright.”
This doctrine has been adopted in subsequent decisions such as Alcatel USA Inc v. DGI Tech (where the licensing of the plaintiff’s software on the condition that it only be used along with the plaintiff’s hardware constituted copyright misuse) and Practice Management Information Corporation v. American Medical Association (where it was held that a condition in the license agreement precluding the user from using competitors’ material constituted copyright misuse). In both these decisions, while copyright misuse has not been expressly defined, it has been categorically held that this doctrine is wider than mere antitrust violation. However, this doctrine has not been consistently applied, as the Courts, in similar circumstances, have also held that restrictive licensing practices do not amount to copyright misuse (for example, Apple Inc v. Psystar Corporation).
Comment
It remains unsettled whether in the USA, the doctrine of unclean hands operates when the defense of copyright misuse is raised. However, “unclean hands” here usually refers to other wrongs (apart from the infringement) that the party may have committed. For example, in Atari Games Corp v. Nintendo, Atari had, prior to the litigation, committed fraud by applying to the copyright office to gain access to a copy of a confidential Nintendo programme on the false ground that Atari required it for the purpose of an infringement suit against it. It was in this context that the Court held that Atari cannot claim copyright misuse as it had unclean hands.
On the other hand, the court in Tekla Corporation has (mis?)interpreted the doctrine of unclean hands to refer to the act of infringement itself. The logic behind copyright misuse being raised as a defense is that the misuse of copyright leads to the copyright not at all subsisting during that period. Therefore, if the Court is to find that there has been copyright misuse, there is no infringement, and the doctrine of clean hands does not apply.
The Delhi High Court’s reasoning that there is a conflict between law and equity in this case also does not stand, as there is no express bar in the Copyright Act on the incorporation of this remedy. Admittedly, the Court is not bound by developments in American Jurisprudence (especially something as inconsistent as the doctrine of Copyright Misuse at present). While the facts in this case need not necessarily show copyright misuse, the Court has missed a great opportunity to examine the policy reasons behind the existence of a monopoly granted by Copyright, and whether the impugned license in this case went beyond what is contemplated by the policy. It could have set the course for an introduction of this doctrine into Indian Jurisprudence.
The consumers and innovators who will benefit from this doctrine are not likely to be powerful enough lobbyists to spur legislative change- but a look at doctrines such as the Public Trust Doctrine (which the Supreme Court in MC Mehta borrowed from a California Court decision) demonstrate that the Indian judiciary has always championed the cause of under-represented parties. If the judiciary in a traditionally IP-maximalist jurisdiction such as the USA can consider the doctrine of misuse, I find no reason why we, as an arguably more balanced IP regime, cannot.
The plaintiffs in this case were represented by Advocate Safia Said, and the defendant was represented by Advocate Kaustabh Sinha.
(I would like to thank Swaraj for his inputs on this post).
