� � � � �

For private circulation only

Quarterly Newsletter from K&S Partners (formerly, Kumaran & Sagar)

������Vol. 1I, Issue 1January - March, 2004

��Party Pooper

On New Year’s eve, the MumbaiHigh Court injuncted seven Mumbaihotels from playing music withoutpaying license fees to PhonographicPerformance Limited (PPL), aregistered copyright society whichadministers the public performancerights of music companies.The order is an eye-opener to severalother hotels who play music whiledodging license fees despitereminders from PPL.

With a view to promoting two of its bev-erages, Sprite and Thums Up, Cokelaunched a series of TV and print com-mercials:

� One commercial featured Coke com-paring its drink with a drink called‘Pappi’ (with a blue and red globe de-vice similar to that used by Pepsi) byreferring to it as ‘a drink preferredby children as it is sweeter’.

� In another, Coke used an advertisingslogan, ‘Yeh Dil Maange No More’,(‘this heart yearns for no more’) tomock Pepsi’s popular advertising slo-gan, ‘Yeh Dil Maange More’ (‘thisheart yearns for more’).

� Yet another commercial featured aboy and a girl on a roller coaster,which Pepsi alleged violated its copy-right in a similar commercial.

Before the Single JudgeAlleging passing off by way of disparage-ment, trade mark and copyright in-fringement, Pepsi sought injunction anddamages from the High Court of Delhi,

Comparative Advertising in Cola WarsThe Indian jurisprudence on comparative advertising has come of age. The latest case involves a war betweenthe two cola giants, Pepsi and Coke.

seeking to restrain Coke from telecastingand advertising the commercials in anyform; that Coke’s slogan ‘Yeh Dil MaangeNo More’ was a substantial reproductionof Pepsi’s slogan ‘Ye Dil Maange More’amounting to infringement of copyright;that Coke’s roller coaster commercial wasa substantial reproduction of Pepsi’s simi-larly themed commercial, thus constitut-ing infringement.

More importantly, Pepsi claimed thatCoke’s commercials disparaged its prod-ucts resulting in the dilution of their good-will and reputation.

In defense, Coke claimed that it was atliberty to puff and promote its beverages.As to the slogan ‘Yeh Dil Maange NoMore’ and the roller coaster commercial,Coke maintained that these were parodiesand aimed at merely poking fun.

After considering rival arguments, theSingle Judge dismissed Pepsi’s claim forinjunction, finding that:

� Coke’s advertisements were instancesof healthy competition and merely inthe nature of poking fun, which waspermissible;

� Pepsi’s slogan ‘Yeh Dil Maange More’,was not copyrightable; and

� there was no infringement of Pepsi’sroller coaster commercial.

Before the Appellate CourtAggrieved by this, Pepsi appealed andraised the following issues:

� whether prima facie Coke had dispar-aged Pepsi’s products;

� whether the ‘globe device’ and the slo-gan ‘Yeh Dil Maange More’ were copy-rightable and if Pepsi’s copyright inthese had been infringed by Coke; and

� whether the essence of the roller coastercommercial had been copied by Cokeand if so, the effect of the same.

As the Casio case highlighted in the Case Law Update section of this issueclearly indicates, Indian courts have been quite progressive in taking

decisions related to jurisdiction in domain name issues.

This quarter we have included three articles covering perspectives on topics asdiverse as comparative advertising, version recording or ‘sound alike’ recordingand exclusive marketing rights, all based on recently decided cases with far-reaching ramifications.

We also take this opportunity to wish our associates and clients a peaceful,prosperous and joyful 2004!

With best wishes

All at K&S Partners

�����������

India IP Update, January - March, 2004

Issue # 1

The appellate court first examined thecommercials to determine whether theword ‘Pappi’ appearing on the bottle wasmeant to denote ‘Pepsi’. In the relevantcommercial when a boy was asked toname his preferred cola drink, his answerwas muted, but it was evident from hislip movements that he was referring to‘Pepsi’. Taking note of the market real-ity that there are only three cola drinks inthe Indian market, namely, Pepsi, Cokeand Thums Up, with the last two ownedby Coke, the court concluded that the boywas obviously referring to Pepsi. Thecourt found support for this finding inCoke’s use of the globe device bearing acolour scheme similar to that of Pepsi withthe word ‘Pappi’ on the bottle.

The court went on to consider whetherCoke’s commercial, which propagatedThums Up as a strong drink and Pepsi asa children’s drink, amounted to dispar-agement. In deciding this, it considered

the intent of thecommercial, its

manner andstory lineand them e s s a g ethat itsought toconvey.

Based on the earlier jurisprudence, thecourt pointed out that, if the manner wasridiculing or condemning of another’sproduct, then it amounted to disparage-ment. But if it only portrayed one’s prod-uct as better without derogating another’sproduct then it was not actionable.

Taking note of the depiction of Pepsi’sdrink as a sweet cola preferred by chil-dren, the court held that such depictiondid not refer to any superior quality ofCoke’s drink, but was a sophisticated wayof showing that Pepsi’s drink was infe-rior. It was not a drink meant for grownups. The choice made by the boy in theadvertisement was said to be ‘wrong’. Itwas held that all these factors amountedto disparagement of Pepsi’s product.

Issue # 2

The court observed that ordinarily whena sentence is proved to have been incommon use, then it is not copyrightablenor can it be protected. However Pepsi’sslogan ‘Yeh Dil Maange More’ was anoriginal combination of words from twodifferent languages, conveying the themeof the advertising. It had acquireddistinctiveness and association withPepsi’s product and was eligible forcopyright protection.

As regards the use of the ‘globe device’along with the slogan, the court found

that both these were not used by Coke inthe course of trade and, therefore, couldnot be said to be infringing Pepsi’s regis-tered trade mark.

Issue # 3

With regard to the third issue, the in-fringement of the roller coaster commer-cial, it was held that Coke’s commercialhad imitated a substantial portion ofPepsi’s commercial and that this amountsto infringement. Coke was accordingly re-strained from showing the impugnedcommercials.

It must be stated here that while findinginfringement of copyright in the roller-coaster commercials, the court did notconsider Section 2 (m) (ii) of the IndianCopyright Act which says that ‘infring-ing copy’ in relation to a cinematographfilm is a copy of the film made on anymedium by any means. In other words,a mechanical copy of the film in anyother medium would be an infringingcopy. The finding of infringement ofcopyright is, therefore, erroneous.

India, being a developing country, availed the 10-year transi-tion period available under TRIPS and has deferred the prod-

uct patent regime until 2005. In the interregnum, the Patent Act,1970 (the Act) was amended to provide for grant of ExclusiveMarketing Rights (EMRs), subject to compliance of certain con-ditions. Such EMRs are akin to patent rights in that the granteemonopolises the distribution and sale of the product in India fornearly five years from the date of grant of EMR or until grant orrejection of product patent, whichever is earlier.To obtain an EMR, the applicant must have obtained:

� patent for the product in question in a convention country,

� marketing approval for that product in that country,

� Drug Controller’s approval to sell the product in India, and

� filed product patent application in India.

However, for an invention made in India, the applicant, apartfrom obtaining Drug Controller’s approval, will be granted EMRon a showing that Indian process patent has been granted for thedrug and product patent application has been filed in India.

On receiving an application for EMR, the Controller of Pat-ents is required to examine for fulfillment of aforementionedconditions and whether the invention is one deemed not pat-entable under Sections 3 and 4 before granting the EMR.

Apparently, 11 EMR applications have been received by the

Exclusive Marketing RightsIndian Patent Office until end of 2003. Till date EMRs havebeen issued to Novartis for Glivec and United Phosphorusfor Carbenazim, an insecticide. Four EMR applications havebeen rejected for various technical reasons and five are saidto be pending.

The grant as well as rejection of EMR has stirred up a caul-dron of litigation. To the generic industry, each EMR grantedcomes literally as a sudden spanner in the works as it inter-feres with vested interests. EMR rejectees too seem unhappywith the progress.

Glaxo Smithkline, Bayer and Roche have approached thecourts for justice on rejection of their EMR applications. Whileat one end of the controversy, the existing difference underthe law between the levels of treatment to Indian EMRapplicants and overseas applicants is cited as violative of theconstitutional right to equality and equal treatment, at theother end, the challenge cites the glaring lack of any statu-tory mechanism for third party opposition in the process ofEMR grant as violative of the constitutional guarantees offreedom of trade and principles of natural justice.

While the courts are seized of the petitions before them, the In-dian Government is considering drastic measures to change thePatent Act, 1970 including introduction of product patent regime,post-grant opposition instead of pre-grant opposition, etc.

India IP Update, January - March, 2004

����� ����

Casio India Co. Ltd. v. Ashita Tele Systems Pvt. Ltd.

In keeping with its liberal approach to issues of jurisdic-tion in trade mark infringement cases in the Internet con-text, the High Court of Delhi has once again affirmedthat jurisdiction in such matters cannot be confined to ter-ritorial limits of the residence of the defendant.

This case involved the defendant, an erstwhile distributorof the plaintiff, Casio India Ltd. (a 100 percent subsidiaryof Casio Computer Ltd., Japan), who had unauthorisedlyregistered the domain name www.casioindia.com. Theplaintiff filed a suit for passing off seeking to restrain thedefendant from using the said domain or any derivative ofthe mark ‘Casio’ or any combination thereof.

One of the main defenses, inter alia, was that the HighCourt of Delhi had no jurisdiction to try the suit as thedefendant resided in and carried on its business fromMumbai. While rejecting the argument of the defendant,the High Court held that the objection with regard to ter-ritorial jurisdiction needed to be considered in the overallcontext of advances and development in the field of infor-mation technology and not in the usual, conventionalmanner.

Assuming jurisdiction in the matter, the High Courtinjuncted the defendant from using the name ‘Casio’as part of its domain name.

Trade Mark

Colgate Palmolive Company & Anr. v. Anchor Healthand Beauty Care Pvt. Ltd.

In this case the plaintiff, the Colgate Palmolive Company al-leged that the defendant, Anchor Health and Beauty Care Pvt.Ltd., violated its intellectual property rights in its distinctivetrade dress and colour combination of one-third red and two-third white on the container of its tooth powder.

The plaintiff claimed that its product bearing the distinctivetrade dress had been sold in India since the year 1951 and hadbecome associated with the plaintiff. The defendant was using asimilar trade dress for its tooth powder and selling it under themark ‘Anchor’.

Claiming injunction on the ground of passing off, the plaintiffrelied upon the defendant’s past conduct in using other variantsof the plaintiff’s trade dress/ packaging.

The defendant raised the following main defenses:

� The plaintiff’s trade dress of red and white was not dis-tinctive of its business;

� The respective products were sold under the distinctivemarks ‘Colgate’ and ‘Anchor’ and as such there would beno confusion; and

� The red and white combination was common to the dentalcare trade.

Allowing the plaintiff’s claim and injuncting the defendant, the

High Court of Delhi held that:

� In a passing off case, it is the first impression of deceptivesimilarity rather than any minute examination of the re-spective products/ labels which ought to determine thequestion of confusion in the market place;

� In an action for passing off it is the similarities and not thedissimilarities which go to determine whether such an ac-tion lies or not; and

� In a country like India with low literacy levels, the colourcombination and get-up of a product alone help in deter-mining the allegations of passing off since semi-literate/unwary /illiterate customers cannot distinguish between‘Colgate’ and Anchor’.

Kiran Gupta v. Pizza Hut International, LLC & Others

In this case the defendant was ini-tially using the plaintiff’s world fa-mous mark ‘Pizza Hut’ in respectof her restaurant. Having obtainedan ex-parte injunction against herrestaurant, from the District Courtof Indore in Madhya Pradesh, theplaintiff genuinely believed that thiswould force the defendant to cease

any further infringing use. However, the defendant changedher restaurant name to ‘Pizza Ghar’ with a hut device (‘ghar’in Hindi meaning, inter alia, ‘hut’).

Claiming the new variant to be nothing but a linguistic andpictorial depiction of its trade mark Pizza Hut, the plaintiffsought a fresh order of injunction and punitive action for con-tempt of court.

The court at first instance disagreed on the question of decep-tive similarity between Pizza Hut and the new logo of thedefendant and declined injunction.

On appeal, the High Court of Madhya Pradesh set aside theorder and directed the plaintiff to pursue its contempt actionwith liberty to apply for injunction on a favourable outcomethereof. The contempt court found for the plaintiff andordered that the defendantundergo one month’s prisonterm and her restaurant beattached.

The defendant appealed to theHigh Court. Rejecting theappeal, the appellate court held that:

� Although the word ‘ghar’ in Hindi might not be an exacttranslation of the word ‘hut’, it could be construed as anequivalent of the same when written inside a hut device;and

� The attachment order would continue till the defendantchanged her restaurant name to some other name not de-ceptively similar to Pizza Hut..

However, the court set aside the prison term on the groundsthat the plaintiff had no Pizza Hut restaurant in Indore andwould not suffer any loss of custom. The last report on the caseindicates that the defendant is changing her restaurant name to‘Pizza World’.

Domain Name

Contact : Phones: 91-11-2653-3182 / 2653-3187 / 2686-5955 / 2660-2411 / 2652-1801 / 2652-4621Fax: 91-11-2653-3889 / 2651-8717 E-mail: postmaster@knspartners.com

(This newsletter is intended to provide only information and updates of Intellectual Property law in India. No part of this newsletter shall beconstrued as legal advice. Any queries that readers may have on any of the information published herein should be directed to

postmaster@knspartners.com or to K&S Partners, 84-C, C-6 Street, Sainik Farms, New Delhi – 110 062, INDIA)© 2003 K&S Partners, New Delhi. No part of this publication shall be reproduced without prior permission of K&S Partners

In India, Super Cassettes Industries Ltd. canrightfully claim to be a pioneer in the ‘cover

version’ (known locally as ‘version record-ings’) market. A major part of its business, asa publisher of music, comprises versionrecordings.

In February 1995, Super Cassettes was suedby Gramophone Company for infringementof its copyright in the musical works whichformed the content of Super Cassettes’ ver-sion recordings [Gramophone Company ofIndia Ltd. v. Super Cassettes IndustriesLtd., 1996 PTC (16)]. The High Court ofDelhi refused injunction on the basis that theversion recordings involved were not ‘in-fringing copies’ within the meaning of theIndian Copyright Act. Under the Act, aninfringing copy in relation to a sound trackmeans a record embodying the recording inany part of the sound track associated withthe cinematograph film. However, the HighCourt agreed with the Gramophone Com-pany on the plea of passing off against Su-per Cassette’s use of design, colour scheme,lay-out and get-up in its in-lay card, similarto that of the Gramophone Company.At the time the case was filed, the CopyrightAct as it stood then, did not have any safeguards in its corresponding statutory licenseprovisions relating to version recordingagainst any passing off or any other act ofunfair competition. However, statutory li-cense provided for a notice to the copyrightowner including giving an undertaking thatthe work being created would not involveany material alterations/omissions from theoriginal work save and except those whichare reasonably necessary for adaptation ofthe work.Pursuant to this, the Copyright Act wasamended in 1995 and one of the amendmentsrelated to the statutory license provisions.Under the amended provisions, a potentialapplicant for a version recording is requiredto comply with certain conditions in respectof a musical work including providing cop-ies of all covers or labels with which thesound recordings are to be sold.In Super Cassettes Industries Ltd. v. BathlaCassette Industrial Pvt. Ltd., 2003 (27)PTC 280, the High Court of Delhi was con-cerned with issues of infringement of copy-right in sound recordings in a slightly differ-

�������

ent and interesting set of facts. Super Cas-settes (plaintiff) sued Bathla Cassette (defen-dant) for infringement of its copyright in soundrecordings comprising certain version record-ings. These version recordings were claimedto be in compliance of the provisions of statu-tory license under the Act. The defendant’sworks were direct and physical copies of theplaintiff’s version recordings.

Dismissing the plaintiff’s claim for injunc-tion, the court held:

� The plaintiff’s version recording was notin compliance of the statutory license provi-sions because, by its own averment, its soundrecording utilised sufficient independent skilland labour, involving engagement of newmusicians, singers and music conductors,thus qualifying as a new arrangement.

� The plaintiff’s averment that the soundrecording created a substantially new ar-rangement was contrary to the notice givenby the plaintiff at the time of seeking statu-tory license to the effect that its version re-cordings would not involve any materialalterations/omissions from the original work.

� Since this averment amounted to non-compliance of the essential conditions forgrant of the statutory license, the plaintiff wasnot entitled to claim any exemption from itsliability for infringement of copyright in themusical work.

� The plaintiff’s work was an infringingcopy because in making the same, it had in-fringed the copyright of the original ownerin the sound recording. In arriving at thisfinding, the court took note of the virtualidentity of the original work and theplaintiff’s version recording in musical ar-rangement, orchestral accompaniment andcue pieces and was a fairly accurate copy ofthe original sound track.

� The plaintiff’s claimed version record-ing (which involved using different singersand artists to sing or record previously re-leased songs) was not entitled to be calledsuch, since it would really apply to thosesound recordings which, while being in-spired by the original melody, involved a dis-tinct interpretation both in presentation,rhythm and orchestral arrangement. For ex-ample, according to the court the famous hitsof the Beatles rendered by the Royal Phil-

harmonic Orchestra could legitimately be de-scribed as in instance of ‘version recording’.

In our opinion, the order delivered by thecourt is erroneous since it fails to take note

of the following:

� That creation of a sound recording bringsinto being two kinds of copyright, one beingthe musical and literary copyright in the un-derlying music and lyrics and the other be-ing a mechanical copyright right in the soundrecording per se.

� While the exclusive acts conferred uponthe owners of musical and literary copyrightsinclude the right of reproduction in any form(which would cover imitations of the kindinvolved in version recordings), the rightsin respect of a sound recording are limitedto making of other sound recordings embody-ing it and selling and communicating thesame to the public.

� As held in the Gramophone case, a ver-sion recording which does not involve anymechanical duplication of a sound record-ing would not be an infringing copy of thesound recording. However, for the statutorylicense exemption it would be an infringe-ment of the musical and literary copyrights.

� The court apparently erred in reading the‘infringing copy’ definition specific to a soundrecording into an analysis of the plaintiff’s ver-sion recording. Since the plaintiff’s versionrecording was not a direct copy of the origi-nal work, it could not have qualified as aninfringing copy under the Act and as held inthe Gramophone case.

� The court did not consider the versionrecording as a separate independent soundrecording entitled to its own life as a copy-right protected subject matter. Instead, it mis-construed the statutory license in respect ofmusical works as an exception to infringe-ment in respect of sound recordings.

� The court’s interpretation of versionrecording appears to be contrary to interna-tionally accepted norms as reflected insuch jurisdictions as Australia and US.If the above order is not appealed, it couldvery well condemn the version recordingindustry in India to virtual extinction asit is based entirely upon the practice ofissuing compilations of songs by artistsother than the original artists.

Examining Cover VersionsInternationally, the term ‘cover version’ in relation to a musical work is understood to refer to the practice of issuing compilation ofsongs by artists other than the original artists, including unknown or lesser known ones. Due to the operation of the compulsorylicensing provisions with respect to musical works in various countries which permit recording artists to record previously releasedsongs without the permission of the song writer, there is a vigorous market for cover version compilations.

,