Copyright Law: Ownership of Copyright

 The fundamental rule is that the author is the first owner of copyright. However, if a
work is a made

a) in the course of employment and b) under a contract of service,

then the employer is supposed to be the owner of the copyright of the work in
question UNLESS there is a contract to the contrary.

 The decision as to whether a work is made ‘in the course of employment’ and ‘under
a contract of service’ is not a simple one to make and depends upon the facts and
circumstance of each case.

 There is NO comprehensive definition of the expression ‘contract of service’.

 According to Halsbury’s Laws of England, the factors that determine whether it’s a
‘contract of service’ or a ‘contract for service’ are

a) The existence of direct control by the person to whom the services are being
rendered over the person who render the services;

b) The degree of independence on part of the person who renders the services; and

c) The place where the services are rendered.

 If it’s a contract of service, then the person rendering the services is known as an
employee, in case it’s a contract for service, then such a person is known as an
independent contractor.

 Traditionally, the most important criterion to distinguish a ‘contract of service’ from a

‘contract for service’ was the power of one person to control the work of another.
 Though that still remains an important criterion, the control test cannot be
considered as a conclusive proof of the employer-employee relationship.

For example, in the case of a skilled employee, the employer could at best give
general directions as to the work or working hours and working place and cannot
directly control the details of his work.

 In Beloff v. Pressdram, a new test called the “the test of integral part of business”
was applied to determine if there was a ‘contract of service’ or ‘contract for service’.
Where a person is employed as part of the business of another person and their
work is an integral part of such business, it’s a case of ‘contract of service’.

On the other hand, where such work is not integrated into the business but is only
accessory to it, it becomes a case of a ‘contract for service’.

Example: Where a company publishing some news magazine takes the services of
an advertising agency for promotion activities, the services rendered by the agency
will not be considered to be an ‘integral part of the business’ of such a company and
a ‘contract for service’ will be said to exist between the company and the agency.

 ‘Intention of the parties’ is another factor to be taken into consideration to see if it’s
a contract of service or not as laid down in Zee Entertainment Enterprises Ltd v
Gajendra Singh (Bombay High Court, 2008).

NOTE: There are more tests on this subject, in case you want to know more about this
topic.

 However, in India, no serious attempt has been made in distinguishing the two
different kinds of contracts, at least in the field of intellectual property law.

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 BAYER Vs CIPLA & UNION OF INDIA

Does a combined reading of the Drug Control Act and the Patents Act lead to an inference that no marketing
approvals can be granted to a third party for a drug/formulation for which a patent exists? This was a primary
question before the Delhi High Court in a recent case involving, inter alia, Bayer & Cipla as the opposing
parties.

There has been a long standing controversy on linking patent status with the drug regulatory/marketing approval
process. As it happens, the drug regulatory/marketing body is separate from the patent granting body and there
is naturally a grey area between the two over their functional overlap while allowing/disallowing a patented
drug to get a marketing approval prior to the patent expiration. While countries like USA has a well defined
‘Patent Linkage’ system that allows a patent holder to link his patent rights with generic drug approval process
(FDA mandates a patent expiration or patent validity challenge before giving any such market approvals), in
countries like India, there has been no such policy bridging the regulatory and the patent approval systems gap.

The facts of the Bayer Vs Cipla case are as under:

Bayer was granted a patent in India for Sorafenib in March 2008. (vide Patent No. 215758). The patent is
schedule to expire in 2020. Bayer manufactures and markets its Sorafenib product as Nexavar in India. The
background for the current case started when Cipla filed an application with the Drug Controller General of
India (DCGI) for a license to manufacture, sell and distribute a generic version of Sorafenib. Bayer opposed it
in the court citing a potential patent infringement in case Cipla’s application for marketing approval is
accepted. Bayer particularly cited (a) its right to stop third parties to make, use, offer to sale, or import its
patented product without its consent (Section 48 of the Patent Act) and (b) DCGI power not to approve the
marketing right for a product that is ‘spurious’ (Section 2 of the Drugs & Cosmetic Act). Bayer’s contention
was that an attempt by Cipla to manufacture Sorafenib will make Cipla’s drug a ‘spurious’ drug under the
provisions of the Drugs & Cosmetic Act. Going further, Bayer demanded a Patent Linkage based system,
wherein the DCGI does not approve the marketing rights for a drug for which a patent exists.

Cipla, along with the other respondents, the DCGI (represented by the Union of India), in its reply, relied on the
logic that merely by granting a marketing approval the DCGI or Cipla, would not be infringing the patent rights
accorded to Bayer in any manner as the act does not fall under the purview of making, using, offer to sale, or
importing its patented product. Further, an act of infringement is established only by a court of law and not
merely by a statement by the patentee. In the present case, the DCGI was not a competent authority to decide if
the drug for which the marketing approval was sought was infringing any existent patent or not. The mandate of
the DCGI is only to assess the safety and efficacy data related to the drug and either approve or disapprove the
drug for marketing within in the Indian territory based on these assessments. Whether or not, the drug in
question would be potentially infringing any patented product in India, is something which is beyond the scope
of DCGI. Also, the Patents Act provides that a drug manufacturer can conduct experiments on a patented drug
to meet the requirements of a drug controlling body (Section 107A). Cipla went a step further to claim that the
Bayer’s patent is invalid and that Cipla is ready to challenge its validity.

On the ‘spurious’ drug issue, Cipla contends that Bayer’s counsel has failed to rightly interpret the word
‘spurious’ in the actual context that it is purported to be used. The addition of ‘spurious’ drug, Cipla maintains,
was to prevent any substitute drug that could be passed off as the original one by use of deceptive marks or
packaging. Cipla, on the other hand, is making a generic copy of the drug and not trying to pass off its product
over Bayer’s product.

Cipla’s contention also extended to Bayer’s plan to introduce the system of ‘Patent Linkages’ in India. The
former came down heavily upon the latter by accusing Bayer to trying to introduce a new system in India,
which is only possible by bringing legislative amendments.

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Counsel for DCGI maintained that vide Section 107A of the Patents Act, a provision is made to experiment on
the patented products for the purpose of submitting data to a drug controlling body. Further, it argued that a
patent right, which is a private right, cannot be enforced by a public entity (DCGI). Hence, the idea that the
DCGI should also peep in the patent status and then grant the approvals is also not sustainable. DCGI role is
restricted to disallow spurious, adulterated and mis-branded drugs and allowing other drugs for market
distribution if its meets other experimental requirements.

Based on the arguments of both the parties, Justice Ravindra Bhat of the High Court of Delhi, concluded the
following:

1. The Drugs & Cosmetic Act and the Patents Act are divergent in their objectives and serves very different
purposes. While the former was framed to avoid any spurious or adulterated drugs to enter into the market,
the latter was framed to allow an innovator company to stop third parties to commercialize their (innovator’s)
product/process. The Officials enforcing the provisions of one Act is not technically competent to deal with
the provisions of the other Act.
2. By accepting Bayer’s proposition to allow a Patent Linkage and stop Cipla/DCGI to approve the marketing
rights for a drug, judiciary would be attempting to enter a legislative role, which it should not be doing.
3. Expecting DCGI to take patents into consideration while granting marketing approvals would not only be
stretching too much of its normal reach but also an attempt to interpret the Drugs & Cosmetic Act beyond its
intended boundaries.
4. The Patents Act has been amended many a times, latest being in 2005. Had there been any intention by the
legislation to bring any changes relating to Patent Linkages, it would have found a place in the amended Act.
5. On the issue of spurious drug, Judge Bhat was in agreement with Cipla’s contention.

Justice Bhat concluded that the present case was an attempt by Bayer to ‘tweak’ public policies through court
judgments. He came down heavily upon Bayer and dismissed the suit with costs.

CURRENT STATUS: Bayer filed an appeal before a division bench of the High Court. Later, the division
bench ruled against Bayer, thus paving the way for the launch by Cipla. Bayer has now approached the Supreme
Court.

REMARKS: The Judiciary at least seems to be very clear about the separate role and functioning of the Drugs
& Cosmetics Act and the Patents Act. It sees a clear cut distinction between scope that one Act allows and the
boundaries the other Act sets. The idea of introducing Patent Linkages was of interest to the Big Pharma Players
and this decision, if in their favor, could have led to a formal introduction of the Patent Linkages concept in
India. Undoubtedly, it would have added to the monopoly of these Big Players. The judgment, therefore, is
timely and keeps in mind the larger interest of public. Moreover, it also acts as a warning signal for companies
like Bayer and Novartis, which had repeatedly tried to tweak with Indian legislation via court rulings.

Case N0: WP ( C ) No. 7833/2008

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 What is Trademark Infringement?
Section 29 of the Trademark Act, 1999 provides remedy in cases of trademark infringement. The
statutory provision also enlists the circumstances under which a mark is infringed:

1. Infringement of a mark occurs when a person not being registered proprietor uses a mark which
is identical or deceptively similar to a registered mark in relation to goods or services in respect
of which the trademark is registered.
2. When a person not being a registered proprietor uses a registered trademark which because of
its identity with registered trademark and similarity with goods or services is likely to cause
confusion in public.
3. When a person not being registered proprietor of a mark uses mark which is identical or similar
to the registered trademark in relation to similar goods or services and the registered mark has
a reputation in India.
4. A registered trademark is infringed by a person if he uses such registered trademark as part of
his trade name of his business concern dealing in goods or services in respect of which the trade
mark is registered.
5. A registered trademark is infringed by any advertising of that trademark if such advertising
takes unfair advantage and is detrimental to its distinctive character.

Cases on Trademark Infringement

When mark adopted by Defendant is identical to Plaintiff’s

registered trademark
If on comparison of the trademarks of the two parties in case the trademark adopted by the
Defendant is identical to that of the Plaintiff, the Plaintiff may not be required to prove anything
further. Section 29 of the Trademark Act, 1999 statutorily mandates so as well. However, when the
two marks are not identical, then the plaintiff would be required to establish that the mark used by
the defendant so nearly resembles the plaintiff’s registered trademark as is likely to deceive or
cause confusion in the minds of the consumer public[1].

Onus to prove infringement on Plaintiff

The Supreme Court in the case of Kaviraj Pandit Durga Dutt case held that in an action for
infringement the onus would be on the Plaintiff to establish that the trade mark used by the
defendant in the course of trade in the goods in respect of which his mark is registered, is
deceptively similar.

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How can the Plaintiff establish that the Defendant’s mark is
identical or resembles the Plaintiff’s mark?
This issue was elaborately discussed by the Delhi High Court in the case of Atlas Cycle Industries
Ltd. v. Hind Cycles Limited[2], wherein the Court stated that in a case of trademark infringement,
the plaintiff may establish that its trademark is identical with or so nearly resembles the plaintiff’s
work either visually or phonetically or otherwise, that it is likely to deceive or cause confusion in
relation to the case in respect of which the plaintiff got his mark registered.

Thus, if the essential features of the trade mark of the plaintiff have been adopted by the defendant,
the fact that there are some additional features in the defendant’s mark which show marked
differences is immaterial in an action for infringement.

Test of deception in trademark infringement cases

The Bombay High Court in the case of Thomas Bear And Sons (India) v. Prayag Narain[3] held
that in judging the probability of deception, the test is not whether the ignorant the thoughtless, or
the incautious purchaser is likely to be misled, but we have to consider the average purchaser
buying with ordinary caution.

The Supreme Court’s decision in the case of James Chadwick & Bros. Ltd. v. The National Sewing
Thread Co. Ltd.[4], can be regarded as an essential obiter dicta which aided in streamlining the
interpretation of trademark infringement law in India. The Court in the case stated that in an action
of alleged infringement of a registered trade mark, it has first to be seen whether the impugned
mark of the defendant is identical with the registered mark of the plaintiff. If the mark is found to
be identical, no further question arises, and it has to be held that there was infringement.

If the mark of the defendant is not identical, it has to be seen whether the mark of the defendant is
deceptively similar in the sense that it is likely to deceive or cause confusion in relation to goods in
respect of which the plaintiff got his mark registered. For that purpose, the two marks have to be
compared.

How to compare marks for deception?

In James Chadwick’s case, the Supreme Court held that to ascertain deception between two marks
the mark need not be placed side by side, but by asking itself whether having due regard to relevant
surrounding circumstances, the defendant’s mark as used is similar to the plaintiff’s mark as it
would be remembered by persons possessed of an average memory with its usual imperfections,
and it has then to be determined whether the defendant’s mark is likely to deceive or cause
confusion.

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 How to determine likelihood of confusion between disputed
marks?
For such determination the essential features of the two marks and the main idea, if any, underlying
the two marks which a purchaser of average intelligence and imperfect memory would retain in his
mind after seeing the marks, have to be noticed. It has then to be seen whether they are broadly the
same or there is an overall similarity or resemblance, and whether the resemblance or similarity is
such that there is a reasonable probability of deception or confusion. In doing so, the approach has
to be from the point of view of purchaser of average intelligence and imperfect memory or
recollection, and not an ignorant, thoughtless and incautious purchaser.

The Trademark Act, 1999 under Section 27 provides for the remedy of passing off for misuse of an
unregistered trademark by the Defendant. It enumerates that no person shall be entitled to institute
any proceeding to prevent infringement of an unregistered trademark. The law further entails that
the provision shall not affect the rights of action against any person for passing off goods or
services as the goods of another person or as services provided by another person, or the remedies
in respect thereof.

What is Trademark Passing-off?

Section 27 of the Act recognizes common law rights of the trademark owner to take action against
any person for passing of goods as the goods of another person or as services provided by another
person or remedies thereof. The remedy made available under Section 27 of the Act protects the
rights of the proprietor of an unregistered trademark to register complaint against another person
for passing off his goods as goods the goods of proprietor. An unregistered proprietor of trademark
can also oppose an application for registration on grounds as enumerated under Section 11 of the
Act[5].

In an action of passing off, the Plaintiff has to establish prior use to secure an injunction and that
the registration of the mark or similar mark in point of time, is irrelevant[6].

Lord Oliver in the case of Reckitt & Colman Products Ltd. v. Borden Inc.[7] enumerated three
elements for a successful passing off action: (1) Goodwill owned by a trader, (2) Misrepresentation
and (3) Damage to goodwill. Thus, the passing action is essentially an action in deceit where the
common law rule is that no person is entitled to carry on his or her business on pretext that the said
business is of that of another[8].

Tests in the case of passing off– The Supreme Court in the case of Cadila Healthcare Ltd. v.
Cadila Pharmaceutical Ltd.[9], laid down the test of passing off and observed that a passing off
action depends upon the principle that nobody has a right to represent his goods as the goods
of some body. In other words a man is not to sell his goods or services under the pretence that
they are those of another person. As per Lord Diplock in Erwen Warnink BV v. J.Townend &
Sons[10], the modern tort of passing off has five elements, namely

 a misrepresentation
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 made by a trader in the course of trade
 to prospective customers of his or ultimate consumers of goods or services supplied by him
 which is calculated to injure the business or goodwill of another trade (in the sense that this is
a reasonably foreseeable consequence), and
 which causes actual damage to a business or goodwill of the trader by whom the action is
brought or (in a quia timet action) will probably do so.

Further in the case of Corn Products Refining Co. v. Shangrila Food Products Ltd.[11], it was
observed that the principle of similarity could not to be very rigidly applied and that if it could
be prima facieshown that there was a dishonest intention on the part of the defendant in passing off
goods, an injunction should ordinarily follow and the mere delay in bringing the matter to Court
was not a ground to defeat the case of the plaintiff.

Is fraud an essential element of passing-off?

According to Kerly Law of Trademarks[12]– Passing off cases are often cases of deliberate and
intentional misrepresentation, but it is well-settled that fraud is not a necessary element of the
right of action, and the absence of an intention to deceive is not a defence though proof of
fraudulent intention may materially assist a plaintiff in establishing probability of deception. The
burden to prove passing off is on the Plaintiff[13] or goods, besides the essential features which are
sufficient to distinguish the same from that of the plaintiff. Thus, while in an action for
infringement of a registered trade mark the plaintiff has to establish either an use of his registered
trade mark as such or of an identical mark or of a deceptively similar mark by the defendant, he has
to establish in an action for passing off that the defendant’s mark or goods are such that the
defendant can pass off his goods as those of the plaintiff[14].

Difference between Trademark Infringement and Passing Off

The difference between a passing off action and an action for trademark infringement was
expounded by the Delhi High Court in the case of Cadbury India Limited and Ors. v. Neeraj Food
Products[15] as under:

 An action for passing off is a common law remedy whereas an action for trademark
infringement is a statutory remedy.
 Passing off action in essence is an action of deceit that is, a passing off by a person of his own
goods as those of another whereas in case of infringement, the Plaintiff on account of being
registered proprietor of the disputed trademark, claims to have an exclusive right to use the
mark in relation to those goods.
 The use by the defendant of the trademark of the plaintiff may be prerequisite in the case of an
action for infringement while it is not an essential feature of an action for passing off.
 If the essential features of the trademark of the plaintiff have been adopted by the defendant,
the fact that the getup, packing and other writing or marks on the goods or on the packets in
which the defendant offers his goods for sale show marked differences or indicate clearly a

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 trade origin different from that of a registered proprietor of the mark, would be immaterial for
the case of infringement of the trademark. The liability of the defendant for such infringement
may be absolute. In the case of passing off, the defendant may escape liability if he can show
that the added material is sufficient to distinguish his goods from those of the plaintiff.

The distinction between passing off and infringement was examined by Judge Clauson in the case
ofListen Ltd. V. Harley[16], wherein he opined that if you are restraining the infringement of a
registered mark, you can restrain the man from using the mark; but, restrain him from
selling the articles under the label containing that word without clearly distinguishing his
goods from the goods of the Plaintiff is quite a different thing.

The Supreme Court in a recent case of S. Syed Mohideen v. P. Sulochana Bai[17], stated that
passing off right is a broader remedy than that of infringement. This is due to the reason that the
passing off doctrine operates on the general principle that no person is entitled to represent his or
her business as business of other person. The said action in deceit is maintainable for diverse
reasons other than that of registered rights which are allocated rights under the Act.

[1] Kaviraj Pandit Durga Dutt Sharma v. Navratna Pharmaceutical Laboratories; 1997 PTC
(17)(DB) 779

[2] ILR 1973 Delhi 393

[3] (1940) 42 BOMLR 734

[4] 1953 SCR 1028

[5] Kaviraj Pandit Durga Dut Sharma v. Navratna Pharmaceutical Laboratories, AIR 1965 SC 980

[6] Century Traders v. Roshan Lal Duggar & Co., AIR 1978 Delhi 250

[7] (1990) 1 All.ER 873

[8] Syed Mohideen v. P. Sulochana Bai, 2016 (66) PTC 1

[9] 2001(PTC) 300 SC

[10] 1979 (2) AER 927

[11] AIR 1960 SC 142

[12] Kerly’s Law of Trademarks and Trade names (para 16.16)

[13] National Sewing Thread Co. v. James Chadwick & Bros., ILR (1949) Mad 41

[14] Atlas Cycle Industries Ltd. vs Hind Cycles Limited; ILR 1973 Del 393

[15] 2007 (35) PTC 95 Del

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[16] (1929) 4 RPC 11 (2)

[17] 2016 (66) PTC 1

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