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EU-India (IP) Dialogue – January 2021

The International Association (INTA) appreciates the opportunity to contribute to the first EU-India IP Dialogue. INTA’s members are encouraged by the IP Dialogue discussions which hopefully will lead to further improvements on the protection and enforcement of IP rights in India.

The first set of suggestions below, under point A, comprising recommendations for key legislative amendments of trademark and related laws in India, have been submitted by INTA to the Indian Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce, in a letter of February 2020. A copy of this letter is attached as Annex I. Further recommendations on enforcement, IP Office practices, issues related to the Madrid Protocol, nontraditional and designs are also submitted below.

We hope you will find these comments helpful in the context of the upcoming IP Dialogue and remain at your disposal should you have any questions or need further information.

A. RECOMMENDATIONS SUBMITTED TO INDIA’S DPIIT BY LETTER OF FEBRUARY 2020:

I. Section 115 (4) of the Trade Marks Act: INTA supports an amendment of Section 115(4) of the Trade Marks Act. Under Section 115(4), owners have encountered difficulties in their mandate to act against trademark infringements by way of seizures or raids in accordance with criminal law. This provision in practice is burdensome, indeed even defeating, in two ways: firstly, it requires that a police officer of a senior rank no less than Deputy Superintendent of Police (DSP) determines the existence or risk of an infringement and orders the enforcement action; and secondly, it requires that the opinion of the Registrar of Trade Marks (hereinafter “Registrar”) be obtained before any action against the infringer can be taken.

This forces brand owners and attorneys to seek remedies for action against trademark counterfeiters, outside the purview of the Trade Marks Act, 1999. They have increasingly relied on either Section 420 of the Indian Penal Code or Section 64(1) of the Copyright Act, 1957 for the seizure or raid of counterfeits, since the Copyright Act does not require the above mentioned prerequisites.

INTA highly recommends that Section 115(4) of the Trade Marks Act be suitably amended in two ways. Firstly, the rank of the authorizing Police Officer should be one that is appropriate for IP crimes, and should be reduced to an officer not below the rank of Sub-Inspector. Secondly, the requirement to obtain the Registrar’s opinion should be abolished since it is time consuming and often ends up jeopardizing the purpose of the seizure.

INTA had made a detailed representation on the proposed amendment to Section 115(4), to the Honorable Minister of Law and Justice and DPIIT, dated 4th May, 2016, which is included in Annex I as Annexure 1.

II. Statutory Damages INTA supports an amendment to the current Trade Marks Act which would allow for “pre- established” or statutory damages to be granted. In 2005, INTA’s Board of Directors passed a Board Resolution advocating for statutory damages as INTA believes that it is in the interest of trademark owners and the government alike to have the strongest enforcement mechanisms possible, such as statutory damages to protect trademarks from infringement, counterfeiting, and fraud.

Trademark owners in India are faced with the reality that many counterfeit businesses operate in cash only, do not provide receipts and have no purchase invoices to assist in calculating an accounting of profits. In instances where the counterfeit business has non-existent records or deceptively kept records to deflate the level of counterfeiting activity engaged in, proving actual damages is very difficult, if not impossible. Without statutory guidance to the courts as to the amount of damages to be awarded, awards are highly likely to be low and thus being considered by counterfeiters as merely the cost of doing business with little to no deterrence effect. INTA would like to note that other jurisdictions that allow for statutory damages include: the , China, Israel, Singapore, and the United States.

III. Anticounterfeiting Enforcement: INTA would also like to recommend that restrictive practices imposed on brand owners after the seizure process be eliminated. These practices include the elimination of the bond requirement imposed on brand owners as a condition to processing counterfeit cases by Customs. These recommendations were also adopted by the INTA Board of Directors in 2005 through the “Measures to Combat Trademark Counterfeiting” Board Resolution.

IV. Creation of IPRC INTA would like to recommend that the Indian law makers and DPIIT mandate the formation of a national Intellectual Property Rights coordination center (IPRC). The goal of the proposed center would be to establish a central coordination unit to fight against counterfeits, piracy, and other intellectual property crimes. Because of counterfeiting’s links to organized crimes, money laundering, threats to public safety, etc., many agencies at the national level are looking at this type of crimes in isolation without developing the expertise to tackle its complexities. The IPRC would be a singular unit of coordination between the different industries effected by these crimes, the governmental officials that work to stop it, and the targeted public. The center would also provide coordination between the different governmental offices at the national level and would facilitate coordination between national officials and other jurisdictions globally. INTA published a white paper detailing the formation of such a center in 2018 which can be found here.

V. Section 134 of the Trade Marks Act: Recent judicial interpretations of Section 134 of the Trade Marks Act and/or Section 62 of the Copyright Act, 1957, the provisions of which are in pari materia, have caused serious prejudice and setback to brand owners in fighting the menace of counterfeiting spread all over India. INTA, therefore, recommends and supports an amendment to Section 134 to strengthen brand owners’ access to effective judicial enforcement and discourage infringements and counterfeiting.

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Section 134 of the Trade Marks Act creates an exception to the general provision of Section 20 of the Code of Civil Procedure, 1908. It provides an additional forum and confers a choice on the registered proprietor to choose the jurisdiction of court where the registered proprietor or registered user or any other plaintiff or any co-plaintiff carried on business. Also, “Carrying on business” under the Trade Marks Act is not defined nor any limitation to meaning thereof is incorporated therein, as it applies only to a Plaintiff (unlike Explanation to Section 20 of CPC which, being in the context of the Defendant, provides ‘alternate forums’ limiting the scope of ‘carrying on business’ therein vis-à- vis places of cause of action).

Despite this, the courts have interpreted Section 134 in a restrictive manner, thereby severely prejudicing the right of overseas brand owners to effectively enforce their trademark rights and prevent infringements in India. The Delhi High Court has linked “carrying on business” by the brand owner to “registered user” and excluded the business of unregistered user/licensee from such consideration.

Section 134 was evidently introduced to strengthen the enforcement mechanism against infringers. It is also evident that contrary to the original legislative intent and purpose, recent interpretations have severely limited the ability of trademark owners to effectively enforce their trademarks in instances of infringement. It is desirable that the judicially imposed limitations on Section 134 be removed through a legislative amendment, as they are contrary to the legislative intent underlying the enactment of the provision and would weaken existing enforcement mechanisms against . It is equally desirable that the brand owner should not be compelled to register its subsidiaries and licensees as “registered users” only to be able to utilize the benefit of Section 134.

INTA’s recommendations in this regard have been previously made to the DPIIT and are included in Annex I as Annexures 2(a) and 2(b).

B. OTHER RECOMMENDATIONS FOR THE CONSIDERATION OF THE EU AND INDIAN AUTHORITIES

I. Enforcement issues The Indian courts have been active with respect to litigious IP matters. Several positive and landmark rulings have been passed in the past few years. Trending concepts such as Dynamic and Anti-suit injunctions, with massive punitive damages being awarded, have found their way into Indian courts. However, some lingering issues continue to be a cause for concern:

i. Counterfeiting of goods: The global trade in counterfeit and pirated goods continues to grow exponentially and is expected to reach upwards of $2.81 trillion by 2022. Counterfeit and pirated goods not only rob the innovators in an economy of their intellectual property rights but also cause harm to consumers and the economy in general. In order to combat the growth of counterfeit goods in India, INTA would recommend that stakeholders work together to conduct capacity building trainings on the local and national levels. Information sharing on recent counterfeit trends and brand identification is critical in preventing harmful counterfeit goods from reaching innocent consumers. In addition to capacity building, increased dialogues with all stakeholders to discuss improvements in online and offline 3

enforcement are imperative in improving the anticounterfeiting landscape. No rules for custom recordal for exports and goods in transit: In India, there are no rules or regulation for recordal of right holder’s trademark to check exports and goods in transit (although there are rules to check import of counterfeits). This has been a consistent concern for a very long time. There have been several dialogues amongst stakeholders to interpret and apply the customs regulations from European Union in India. The primary criticism against this proposal has been the possibility of misguided and erroneous seizures of pharmaceutical products which could lead to disruption of movement of low-cost generic medicines. On the flip side, lack of screening and seizures at the borders is also the primary cause of increased movement of counterfeit pharmaceutical products. Therefore, it is crucial to discuss and agree on strategic solutions to such concerns specific to trademarks and counterfeits that can be incorporated into the regulations. The issue of access to generic medicines is different and needs to be clearly differentiated from trademark counterfeiting, which also affects generic medicines.

ii. Backlog of cases in courts: The litigation regime in India has taken long strides towards progress in IP jurisprudence with the grant of new remedies such as dynamic and anti-suit injunctions. However, there is still a huge backlog of cases in both civil and criminal courts.. The obvious downside of litigation proceedings is that they are expensive and time consuming; the delay in disposal of a case is due to limited infrastructure and excessive litigation.

II. IP Office practices i. Lack of quality in examination of trademarks: Despite regular training sessions being conducted for examiners, the examination pattern is not consistent. Better training of examiners would be of benefit both to brand owners as well as to better identify instances of bad faith.

ii. Backlog of opposition cases at the Trademarks Registry: While both the Government as well as the IP Office have taken several steps to ensure faster services such as digitization, ramping up of manpower etc., there remains a substantial backlog of opposition cases to be decided. This obviously has an impact on being able to secure protection in a timely manner..

iii. Procedure of determination of well-known marks is not streamlined: The Trade Mark Rules of 2017 brought in a new rule under which any person may request the Registrar for determination of a trademark as well-known by way of an application on the prescribed form, accompanied by a statement of case along with evidence, documents, and a prescribed fee of INR 1,00,000. However, the procedure to implement this rule is not streamlined, and no timelines are prescribed. Further, the size limit of uploading documents is also inadequate. This ambiguity poses problems for brand owners and discourages them from seeking this declaration. Clarification is thus recommended. 4

iv. Confidentiality: All documents filed with the application are available for public inspection. This is often a concern for brand owners who want to keep some documents and revenue/sales figures confidential.

III. Issues related to the Madrid Protocol

i. Lack of transformation module for International applications:

Although there is increased efficiency at procedural levels, technological advancement is still ongoing. Despite there being a provision in the Trade Marks Rules for transformation, the IP Office is yet to introduce a module for transformation of International Registrations.

ii. Division of classes in International applications is not allowed:

The Trade Marks Registry does not allow for division of classes in an International application. The Government of India has notified the Director General of the World Intellectual Property Office (WIPO) that the new rule, providing for the possibility to file a request for division, is not compatible with the law of India and does not apply in respect of India. This is contrary to the position of the Trade Marks Registry in national applications. As a matter of sound legislation, it is important that the law and practice remains uniform for both national applications as well as International Registrations designating India. Having different set of rules for national and International registrations is not a desired situation.

IV. Nontraditional Trademarks

i. Distinctiveness criteria:

A trademark has been defined in Indian Trade Marks Act, 1999 under Section 2(1)(zb) as any mark which is distinctive, and capable of distinguishing goods and services of one person from that of other. In certain circumstances, nontraditional trademarks may not be able to fulfill this criterion of distinctiveness.

For smell or taste marks, the Indian Trademarks law requires the applicant to provide evidence to show that the smell or taste is solely associated with them; exclusively designates their goods/services and that the public associates the smell or taste with the goods/services indicated in the application. Accordingly, although shape and color marks can be recognized consistently by consumers, other kinds of nontraditional marks such as smell and taste marks fall short of distinctiveness, as the recognition about the mark may differ from person to person. This makes it difficult for an applicant to prove the distinctiveness of the mark. Further training and exchange of best practices are needed to modernize the trademark system in India and help it adapt to new technologies.

ii. Graphical representation requirement:

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In order to apply for registration of a nontraditional trade mark, the mark must be graphically represented as required by Section 2(1)(zb) of the Act. The words “capable of being represented graphically” means that the mark ought to be such as capable of being put to register in a physical structure in a form and furthermore being published in the journal. However, this requirement of graphically representing nontraditional acts as a barrier to the recognition of the marks, particularly in the case of smell and sound marks.

The absence of new systems for distinguishing and categorizing such marks and the absence of a separate registration procedure for nontraditional trademarks is an impediment to the industry which relies on sounds and smells as their promotional techniques.

The Trade Marks Rules 2017 facilitates the registration of sound mark by representing it in a sound file in MP3 format not exceeding thirty seconds along with graphical representation of its notation.

As for smell mark registration, there is no provision till date and is a category which is difficult to register as trademarks as they lack the quality of meticulous graphical representation and precise description in written form and cannot be recorded in any form. As per the Trademarks examination manual, the definition of trademark makes it clear that any sign, in order to constitute a trademark, should be “represented graphically” [section 2(1)(zb)]. Accordingly smell marks do not meet this requirement, under the Indian trademark system.

We recommend that steps be taken by the Indian legislator to amend the trademarks law to make the registration of nontraditional marks easier. Notably, the elimination of the graphical representation requirement should be considered. INTA strongly supported the abolishment of this requirement in the European Union, during the EU trademark reform, as a way to facilitate the registration of new types of marks.

The use of new technologies to file nontraditional marks should also be incentivized and in parallel, the Indian IP Office should be capacitated and supported in the development of robust technological tools that allow of the publication, processing and examination of new types of marks.

iii. Lack of separate searchable database for nontraditional trademarks:

The current trademark search system in India does not provide for a separate search option or a database for nontraditional trademarks. The public search that is available on the official IP website of India provides only for wordmarks, Vienna code and phonetic search options. The E-Register which is available on the same website acts as the database for trademarks filed in India wherein the information regarding a mark can be accessed upon entering its trademark application number.

Any trademark that is filed would get segregated into ‘wordmark’ or ‘label / device mark’ category. A specification of the nature of the mark is possible for sound marks. Many other non-conventional trademarks like shape marks (e.g., shape of buildings, shape of

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goods),color mark, among others, should be filed as label or device marks. Nontraditional marks thus become unidentifiable as such and are miscategorized.

The application guidelines state that applications for sound marks must clearly state that they are sound marks. Otherwise, the applied mark will be categorized as a word and/or device mark (e.g., in the case of musical notation).

Considering the development of new technologies, increasingly used by businesses, and their potential in the protection of ideas, we recommend that the existing legislative framework and administrative practice be amended and modernized so that non- conventional trademarks can be effectively protected and enforced. Such development would also attract and motivate further investments in the protection of intellectual property and more ideas to flow into the economy.

iv. Limitations for shape marks:

With regard to shape marks, Section 9(3) of Trade Marks Act provides that a trademark shall not be registered if it consists exclusively of –

a) the shape of goods which results from the nature of goods themselves; or b) the shape of goods which is necessary to obtain a technical result ; or c) the shape of goods, which gives substantial value to the goods

The examination guidelines indicates that the shape of goods like shape of a lamp would appear to add substantial value to the goods by making it attractive and that this would attract objection under Section 9(3)(c) and also 9(3)(a).

We believe that this kind of interpretation may be detrimental to the registration of many shape marks which may be deemed as giving substantive value to the goods only by reason of its attractiveness. In fact, it is often the very attractiveness of a sign that underlies the intention to register it as a trademark.

It is also indicated in the trademark application guidelines that a trademark application consisting of the shape of goods or packaging should be in relation to the goods only and not in respect of the container e.g., where the right in a mark is claimed in respect of perfumes contained in a bottle, the goods should be shown as “perfumes” and not as “bottles” which is merely a container. Therefore, in such cases, the applicant will only be able to claim registration for the goods carried in the actual product bearing the shape mark and not for the product itself. We therefore recommend that it be clarified that a trademark application is admissible when the good is the packaging/container itself, provided that the requirements for registration are fulfilled.

V. Designs

i. Accession to the Locarno Agreement:

India published the draft Design (Amendment) Rules, 2019, in October 2019 for public objections and suggestions. While these draft Rules provided for the adoption of Locarno Classification (International Classification for Industrial Designs) as the primary

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classification for design applications in India, these Rules are pending approval for over more than a year and are yet to come into effect.

As a result, applicants are still required to file according to the design classification provided under the existing Design Rules and are not able to avail the benefits of the latest edition of Locarno Classification.

Furthermore, while Class 32 of the Locarno classification system explicitly includes, inter alia, ‘graphic symbols’ and ‘’ and thereby recognizes registration of industrial design in respect thereof, it appears that ‘graphic symbols’ and ‘logos’ may be ineligible for design registration in India as these may be identified as ‘trademarks’ which are specifically excluded from the definition of ‘design’ under the (Indian) Designs Act [Section 2(d)]. A clarification should thus, be provided in respect of the registrability of designs under Class 32 of the Locarno Classification. Moreover, acknowledging the growing overlap of subject matters, the definition of ‘designs’ should be also amended to delete the exclusion of ‘trademarks’ therefrom towards a more harmonious interpretation and protection of IP rights.

According to its Model Design Law Guidelines, INTA supports cumulation of IP rights, where the respective registration and enforcement requirements are respected. The bases, functions, purposes, and intents of the diverse intellectual property rights (including design rights, utility patents, copyright, and trademarks) are different and stand independent of one another. Therefore, in order to spur innovation and creativity, intellectual property rights owners should be free to pursue any and all available sources of protection, both limited-term protection in the form of designs, and unlimited-term protection in the form of trademark and other IP rights.

ii. Accession to the Hague System for the International Registration of Industrial Designs.

India has acceded both the PCT System (for patents) and (for trademarks). We invite India to accede to the Hague Agreement Concerning the International Registration of Industrial Designs (the “Hague Agreement”). The Hague System establishes an international procedure for the filing and registration of industrial designs.

Under its Board Resolution of November 15, 2016, INTA encourages countries, intergovernmental organizations, and non-member countries whose citizens are covered by the adherence of an intergovernmental organization to accede to the Hague Agreement. Further, countries and intergovernmental organizations acceding to the Hague Agreement should enact implementing legislation on the registration and enforcement of design rights.

Since, under the Hague System, any substantive aspect of the protection is entirely a matter for the domestic legislation of each designated Contracting Party, accession to the Hague System will not impact the substantive law with respect to the examination, appeals or cancellation of industrial designs in India. Accession to Hague System will require amendments to the procedural law and will not only benefit the non-Indian applicants to obtain design protection in India, but also the Indian applicants to seek and obtain design protection outside India.

Ninety-one jurisdictions are already part of the Hague System, including the EU, the United States, the United Kingdom, Japan, South Korea, Canada, Israel, among others.

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iii. Limitations of e-filing of design applications:

INTA commends the Indian authorities for establishing the possibility to file design applications electronically. Since e-filing has been enabled, all the records are filed and maintained in digital format which is also a very positive development. However, under Rule 3(1) of the Design Rules, the applicant is still required to file a paper copy or original of all the documents filed electronically, including the design application itself within 15 days of the electronic filing. In our view, such mandatory paper filing is unnecessary and burdensome for the applicant. Furthermore, this requirement not only adds to the cost, time, and resources for prosecuting design applications, but is also environmentally unfriendly as it results in an undue waste of paper.

In September 2019, the (Indian) Patent Rules were amended to incorporate “if asked to be submitted” with respect to the filing of such original documents at the IP Office. We suggest that a similar amendment of the Designs Rules be considered, so that such filings (of paper copy or originals) are mandatory only when requested by the Examiner, and not by default in every case.

iv. Time period for registration of assignment

Under Section 30(3) of the Indian Designs Act of 2000, an assignment, license, or the creation of any other interest in the registered design shall not be valid unless an application for registration is filed at the IP Office within six months from the execution of the instrument. Further six months extension of time may be allowed, which is subject to the Controller’s discretion.

We recommend that the above limitation period of six months be removed, as it causes hardship for the applicants. Such limitation does not exist neither in the Patents Act nor in the Trademarks law. Hence, Designs Act should be harmonized with the legislation for the other IP rights.

Under INTA’s Model Design Law Guidelines, there should be optional (but not mandatory) registration for security interests and assignments. There should be no mandatory requirement to register licenses of designs. Registration should give notice to the world of the interest or transaction but should not be the determinant date from which the interest or transaction takes effect.

Given the value of design rights and the importance of establishing who owns them and what encumbrances may exist over them, for example, in relation to the taking of security, a system for registering those interests is desirable. However, a non-mandatory system is strongly preferred, as a mandatory system could unfairly penalize inadvertent or delayed noncompliance.

v. Protection of Graphical User Interfaces (GUIs)

Designs related to GUIs are not considered registrable as they do not deem to satisfy the definition of “Design” and Article” under the Designs Act.

As per its Model Design Law Guidelines and Guidelines for the Examination of Industrial Designs, INTA supports the protection of icons and GUIs as designs provided that they otherwise meet the requirements for registration.

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In many instances, GUIs and icons have become a key aspect of a company’s overall brand. They should therefore be considered an important part of the company’s overall IP portfolio. INTA considers that design protection of the visual appearance of GUIs and icons should be provided, independently from any other form of protection available, regardless of the technical means of creating it, and whether or not they are projected onto a screen or otherwise only appear when technology is activated. Because the lifespan of such designs can be very short, to the extent that GUIs and icons may be eligible for overlapping protection, INTA believes that design law is a good tool to provide short-term protection. Also, this should be without prejudice to protection appropriately provided under other laws, such as copyright, trademark, or the law of unfair competition/.

About INTA

The International Trademark Association (INTA) is a global association of brand owners and professionals dedicated to supporting trademarks and related intellectual property (IP) to foster consumer trust, economic growth, and innovation. Members include nearly 6,500 organizations, representing more than 34,350 individuals (trademark owners, professionals, and academics) from 185 countries, who benefit from the Association’s global trademark resources, policy development, education and training, and international network.

Founded in 1878, INTA is headquartered in New York City, with offices in Brussels, Santiago, Shanghai, Singapore, and Washington, D.C., and a representative in New Delhi. For more information, visit inta.org.

ANNEX I: Letter to the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India, February 19, 2020

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