IP Overlaps: Did The Court Get it Wrong in Micolube?

Overlapping IPI would argue yes! Well, at least on one count. Otherwise, it’s a very fine decision with well-articulated and sound legal propositions.

But first a bit of background, drawn unabashedly from my chapter in “Overlapping IP rights”, a book jointly edited with Neil Wilkof.

Background to Micolube Dispute

“In M/S Micolube India Limited v Rakesh Kumar Trading As Saurabh, the plaintiffs, engaged in the business of manufacturing and selling petroleum products, sought an interim injunction against the defendants who sold a similarly shaped product, based on their registered design and under the common law of passing off.

At the court of first instance, the single judge relied on the express savings clause for ‘passing off’ in Section 27(2) of the Trade Marks Act and held that the absence of a similar savings cause in the Designs Act precluded one from maintaining an action for both design protection and passing off.”

However, rather than issuing a final ruling in the matter, the judge noted that the divergence of opinion in this regard (as to whether a dual cause of action under passing off/designs act is maintainable) in two earlier cases (Tobu and Smithkline Beecham), and referred the matter for resolution to a larger bench of the Delhi High Court.

It is this decision of the “reference” bench (a term that is not of the art: but one that I use for the sake of convenience) that I intend to assess in this blog post. Gopika had already covered this decision extensively in a blog post here.

Given that the reference bench issued its decision on May 2013, well after our book was published, my chapter does not contain a reference to this ruling.

Single Judge Issues on Passing Off vs Design Infringement

The reference bench rightly takes issue with the single judge proposition that the absence of a specific savings clause for “passing off” in the designs act meant that one could not maintain a dual cause of action for both passing off and design infringement. As I had noted in our book chapter:

“The single judge frames the issue incorrectly, namely, ‘whether there exists any remedy of passing off under the Design Act.’ Posed as such, the answer is easy to arrive at, for the Designs Act does not specifically provide for the remedy of passing off. Indeed, no design regime can ever be expected to provide for such a remedy, given that the aims of the two regimes are distinct. While the common law tort of passing off is intrinsically connected with trademark protection and aimed at preventing source related confusion in the minds of a consumer, the Designs Act protects aesthetically pleasing patterns, ornaments, and shapes capable of industrial application. “

Overlapping Design + Trademark Protection: Misreading of Section 19?

The reference bench then goes on to problematically note that although a shape that qualified as a trademark could not be registered as a design (owing to the definition of “designs” in section 2 which excluded a “trademark”), a design once registered could begin functioning as a trademark. And when this situation came to pass, an IP owner could maintain a dual cause of action under both design law and trademark law (passing off).

The judges draw sustenance for their proposition from the fact that there is nothing in section 19 (the provision of the designs act dealing with cancellation of designs) to suggest that a design could be cancelled on the ground that it had become a trademark/source indicator. In their words:

“Therefore, having regard to the definition of a design under Section 2(d) of the Designs Act, it may not be possible to register simultaneously the same mater as a design and a trade mark. However, post registration under Section 11 of the Designs Act, there can be no limitation on its use as a trademark by the registrant of the design. The reason being: the use of a registered design as a trade mark, is not provided as a ground for its cancellation under Section 19 of the Designs Act.”

Unfortunately, the judges appear to have misread section 19.

I reproduce the section in full:

  1. (1) Any person interested may present a petition for the cancellation of the registration of a design at any time after the registration of the design, to the Controller on any of the following grounds, namely:-

(a) that the design has been previously registered in India; or

(b that it has been published in India or in any other country prior to the date of registration; or

(c) that the design is not a new or original design; or (d) that the design is not registrable under this Act; or

(e) it is not a design as defined under clause (d) of section 2.

Clause (e) clearly suggests that a design could be cancelled when it ceased to be a design. As per section 2 of the Designs Act, a design means “…the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article…….; but does not include any trade mark as defined in clause (v) of sub-section (1) of section 2 of the Trade and Merchandise Marks Act, 1958…..”

Clearly, this would mean that the moment a registered design began functioning as a trademark, it was no longer a “design” as understood by section 2. And was therefore liable to be cancelled under section 19.

At least that’s the way I read section 19 and I’d be happy to be corrected on this front.

Ps: For those interested in a more detailed discussion of IP overlaps in India, see this SSRN link where I’ve uploaded my chapter. If you’re interested in purchasing the book (which boasts outstanding chapters from some of the leading IP luminaries the world over), there is a global edition as also a lower priced India edition. And here is the inimitable Neil Wilkof (who’s just been elected to the INTA Board of Directors) speaking on what prompted this book in this youtube video here. Lastly, for those interested in overlaps, there is an excellent line up of speakers at INTA’s December do in Munich on trademarks and other overlapping IP rights.

Pps: I was quite struck to see the court repeatedly refer to design registration as a “monopoly”. Illustratively, the court notes in one of the paras: “Since registration of design creates a monopoly, each design on registration will necessarily be presumed to be unique.”

Does a registered design confer a “monopoly”, at least as in an “economic” sense? I sense not, since a design merely enables one to prevent another from appropriating the very same design, but not from selling a functionally similar product that does not replicate the design. From the vantage point of competition law, the relevant market could well be the market for all substitutable functionally equivalent goods, whether or not they carried the same design. As such, a design owner can hardly be said to be vested with a monopoly. Of course, this is a fact specific analysis and another situation may lend itself to a finding that a design registrant does indeed possess monopoly power. For those interested, Neil Wilkof has an insightful post on IPKat reflecting on this issue of terminology.

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