SpicyIP Weekly Review (April 5 – 11)

Topical Highlights

SCOTUS Decision in Google v. Oracle: Distorting ‘Fair Use’ but the Scathing (and Logical) Dissent is the One Saving Grace

In Part I, Adarsh summarizes the recent SCOTUS ruling on Google’s copying of roughly 11,500 lines of code relating to 37 software packages forming part of Sun Java API, owned by Oracle. The court renders no finding on copyrightability and has restricted itself to the question of fair use by undertaking the four-factor analysis. On ‘Nature of the copyrighted work’, it holds that “declaring code” is intrinsically far away from the “core of copyright”, i.e. less worthy of copyright protection. On ‘Purpose and Character of use’, it rules that the use of required amount of APIs for creating new products/expand the use of Android-based smartphones is transformative. The ‘Amount and Substantiality’ is interpreted in light of the use being transformative. The 11,500 lines from a total of 2.86 million lines, amounting to only 0.4% of the total was used not because of its creativity, but because of programmers’ familiarity with the Sun Java API system. On ‘Market Effect’, it finds that Google’s Android platform catered to a distinct and more advanced market (smartphones) than what Sun/Oracle was catering to (desktops and laptops, “feature” phones). To not allow Google to claim fair use would give Oracle the ability to cause public harm – it will create a lock, limiting future creation of new programs. Thus, it is a case of fair use.

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In Part II, Adarsh discusses the minority’s dissenting opinion and critiques the majority ruling. The minority criticises the Courts approach of determining the application of an exception/defence without issuing a finding on the existence of the right, i.e., copyrightability. It finds the APIs copyrightable, as they fulfill the originality standard of ‘minimal degree of creativity’. On the ‘Nature of the copyrighted work’, the minority criticises the majority’s position to relegate “declaring code” to lower strata of copyright protected subject matter. O ‘Market Effect’, the minority notes the majority’s failure to account for the damage caused to Oracle. On ‘Purpose and Character’, it opines that the mere fact of making new physical products carrying the verbatim code but in a competing platform is not “transformative”. On ‘Amount and Substantiality’, the minority observes that neither Google nor the majority disputed the Federal Circuits conclusion that Google copied the heart or focal points of Oracle’s work. Agreeing with the minority’s criticism of the transformative use finding of the majority, Adarsh then points out that the majority fails to attribute Oracle for the declaring code’s success. The tremendous commercial gain made by Google was at Oracle’s cost – the loss of revenue from licensing deals and thwarting Oracle’s effort to enter the market through 3rd parties. He then discusses Indian copyright law on software, and concludes that the SCOTUS decision has limited value for India.

Breaking: President Promulgates Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance 2021

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Praharsh reported that subsequent to the Tribunal Reforms (Rationalisation and Conditions of Service) Bill 2021proposing to scrap IPAB, not being passed in the present session, the President, on 04/04/21 promulgated the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance 2021 (pdf) using the powers under Article 123 (1) of the Constitution. He has reproduced the Transitional Provisions of the Ordinance laying out the plan for the matter currently pending before the IPAB.

Thematic Highlights

Vote for Enjoy Enjaami?: Elections, Parody Songs, and IP

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Nikhil discusses the issue of unauthorized use of songs for political campaigns, in light of the use of the song Enjoy Enjaami by Dhee and Arivu with superimposed audio, prompting voters to vote for a political candidate. Proceeding on the assumption that this case of use was unlicensed, he surmises that this would amount to a prima facie case of infringement under the Copyright Act. He explains that while there is no specific exception covering this use under Section 52, the ‘fair dealing’ exemption for the purposes of ‘criticism or review’ of any work under Section 52(1)(a)(ii) may be liberally interpreted to cover this case. Undertaking a fair use analysis, he notes that the four factors support conflicting conclusions. However, since the use in question is to serve political goals as against a bona fide creative work, Nikhil argues that this should be seen as a case of infringement. He then points out that the owners of the song may have remedies available to them under publicity rights, moral rights under Section 57, and the Trademark Act. He concludes that misappropriation of ‘politically loaded’ songs such Enjoy Enjaami which challenge oppression and caste discrimination and recognise the importance of nature and communities should be restrained because such misappropriation ignores the interests and concerns of marginalized communities and utilizes their art and culture for political ends.

Non-Fungible Tokens (NFTs) and Copyright Law: A “Nifty” Dilemma

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In a guest post, Avani Kelkar explains the concept of Non-Fungible Tokens and how they interact with copyright law. She discusses in detail how an NFT is a unique digital asset (token) that is minted, recorded, and traded on blockchain technology and can be used to determine the authenticity and ownership of a particular asset or item. Since the sale of an NFT involves making a copy of the creative work and communicating it to the buyer, any unauthorized reproduction, distribution, or adaptation may amount to copyright infringement on account of Section 14 of the Copyright Act. She elaborates that most NFT sales merely convey a license to use the digital copy of the creative work and the author or copyright holder retains their copyright. In purchases, the governing digital contract – which may be shaped according to the parties’ wishes – underlying an NFT determines what rights a buyer has with respect to the digital copy of the creative work that they receive. She concludes that NFT’s have ushered in a significant change to the art world by somewhat democratizing the experience related to a creative work such that the general public need not be restricted from being able to view the artwork.

Non-Fungible Tokens (NFT) Sales and Copyright Assignment: Part I (The Contract is the Key)

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Adarsh discusses issues relating to NFTs purchase contracts. He begins by recounting the legal understanding of NFTs and their operation on blockchain technology. He explains how the problem of easy replication of digital works is solved with NFTs as the original work can be identified by associating it with an NFT because the other copies of the work floating around will not be related to the NFT. Exploring the question of whether purchase of NFTs is a copyright license, an assignment, or simply a transfer of ownership, he argues that the answer depends entirely on the contract and nothing in Indian copyright law prevents such contracts from assigning or licensing the copyright, or simply selling the copyrighted article without dealing in the underlying copyright. However, he cautions that since this digital space is also being built on existing real-world commercial practice, it would be illogical not to have such a contractual term on copyright treatment while valuing the NFTs to have such high values. He also notes that NFT marketplaces entitle creators/authors to set up a recurring royalty term on future downstream sales by the purchasers, allowing flexibility to implement authors’ royalty rights under 2012 Amendments with ease.

Non-Fungible Tokens (NFT) Sales and Copyright Assignment: Part II (Some Issues for Discussion)

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In this post, Adarsh questions his previous assumptions 1) copyright subsists in the underlying work/digital asset, and 2) The owner of the copyright has created the NFT. In case there is no copyright over the underlying assets, no issue relating to assignment or licensing arises. However, if the copyright owner is not the one who has created the NFT, Adarsh discusses whether a sale by one other than the copyright owner amounts to infringement, and if remedies are available to the copyright owner. He explores the possibility of having verification exercises and takedown measures on platforms, and the extent to which such mechanisms might be needed as per the Information Technology Act. He also highlights the issue of value proposition involved with such transactions, which would be meaningless without proper due diligence over the NFT minter and the work’s provenance. Lastly, he analyses the contentious issue of the effect of an AI-authored work in the present context.

Other Posts

The Compilation of the Decade of SpicyIP Posts on IPAB

Image by Timothy Appnel, from here. CC BY-NC-ND 2.0

Swaraj and Praharsh have compiled a list of about 50 posts on SpicyIP discussing the IPAB and the issues and challenges relating to it. As the IPAB was finally scrapped through a recent ordinance, with its powers/duties transferred to High Courts and Commercial courts (for copyright matters), they recall that Prof Shamnad Basheer had been calling for the shutting down of this tribunal for 11 years. The posts they have compiled consist of several threads of public discussion brought about through the efforts of Shamnad and Prashant, aided by others on and off the blog, where issues with the IPAB were discussed and dissected, and alternative futures were imagined. It includes a PIL challenging the IPAB, filed by Prof Basheer in his capacity as the MHRD IP Chair at NUJS. The complete list with links to specific posts and series of posts can be accessed in this compilation.

Position of Position Trademarks and Related Confusion

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In a guest post, Dr. Sunanda Bharti discusses position trademarks, and how they fit into the existing trademark regime. She begins by explaining how non-traditional trademarks are recognized in EU and India, and the challenges therein. She focuses on the graphical representation requirement which is likely to create an impediment for position marks as they would consist of both the mark itself and the position. On the question of distinctiveness of position marks, she suggests that the sign/symbol/mark element of position marks should be seen not in isolation, but in the context of its position in order to decide the distinctiveness. She then discusses the various complexities involving such marks. Would use of the position mark on a separate product be considered infringement? How would dilution be determines, especially in case of use of unrelated goods? She illustrates with the help of the Green Frog position TM for shoes and Greek Cross TM for clothes. In conclusion, she cautions that our trademark regime must proactively establish rules and norms for treatment of such trademarks lest it be taken by surprise by position trademarks with transnational reputation seeking a place in the Indian register.

Madras High Court Grants Interim Injunction to Kibow Biotech, Making Problematic Observations on Patentability of Subject Matter

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Praharsh critiques the reasoning followed by the Madras HC in its recent order “making absolute” a previously granted interim injunction in the litigation between US corporate Kibow Biotech and Indian entities La Renon Healthcare Pvt. Ltd. and Stanford Labs Pvt. Ltd. Having discussed the history of the litigation, he contradicts the court’s conclusion that the patent is more than a mere admixture of its components resulting in aggregation of their properties, meeting the requirements of Section 3(e) of Patents Act. He points out that it is not explained how the ‘combined effect’ of the mixture is greater than the sum of its parts. According to him, the court should have completely avoided summarily discussing applicability of Section 3(e) in the present case. Praharsh further explains that the Court’s reasoning for dismissing the Respondent’s arguments on the patented subject matter being an admixture is based on the revocation ruling of the IPAB and the Court’s subsequent order in the Writ petition. However, these two orders have their own set of limitations and are not sufficiently clear on the issue. Thus, Therefore, it would have been better had the Court reserved itself from getting into these intricacies.

Other Developments

Decisions from Indian Courts

  • Delhi High Court in Kbm Foods Pvt. Ltd. v. Sachin Gupta, granted an interim injunction against the defendants’ use of the COW device mark and the other essential features of the label and trade dress of the plaintiff either in isolation or in conjunction with each other and thereby causing confusion and deception [April 6, 2021].
  • Delhi High Court in Britannia Industries Ltd v. ITC Ltd & Ors. denied an injunction, holding that although the defendants’ packs are similar in appearance to the plaintiff’s packs, the points of similarity are insufficient to render the pack of the defendants confusing or deceptively similar to that of the plaintiff [April 5, 2021].
  • Madras High Court in Gem Edible Oil Private Limited v. Carrying On Business At decreed the suit ex-parte in favour of the plaintiff holding that a strong case for grant of injunction protecting the trademark ‘GEM’S GOLD’ had been made out [April 1, 2021].
  • Madras High Court in Manohar Singh v. Vimal Sehnaaz (India) granted an order of interim injunction owing to the plaintiff’s continuous usage of the mark ‘BANSURI’. It held that the plaintiff had made out a prima facie case and this was strengthened by their registration [April 1, 2021].

Other News

  • Central government has notified the Copyright (Amendment) Rules, 2021 which amends the Copyright Rules, 2013 [See Nikhil’s analysis of the Rules, here].
  • US Supreme Court ruled that Google’s use of Oracle’s API is fair use [See Adarsh’s posts on the ruling here and here].
  • England and Wales Court of Appeal dismissed an appeal by San Francisco-based digital radio company TuneIn, upholding a finding of copyright infringement by its unlicensed stream of music.
  • Brazil’s Supreme Court suspended 10 year statutory term extensions of drug patents due to the public health emergency caused by COVID-19.
  • UNICEF’s Executive Director has called for simplifying IP rights for COVID-19 vaccines through voluntary licensing, expressing reservations regarding the TRIPS Waiver Proposal.
  • A brief published by ORF discusses the merits of the TRIPS Waiver Proposal.
  • Nike and the maker of Lil Nas X’s ‘Satan Shoes’ have reportedly settled a trademark dispute brought by Nike, and the latter will buy back Nike shoes it has sold.
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