Information on this blog is being shared only for the purpose of creating legal awareness in public at large, especially in the field of Intellectual Property Right. As there may be possibility of error, omission or mistake in legal interpretation on the contents of this blog, it should not be treated as substitute for legal advise.
Monday, April 21, 2025
AstraZeneca AB Vs P Kumar
Balar Marketing Pvt. Ltd. Vs. Lakha Ram Sharma
Sunday, April 20, 2025
Procter & Gamble Manufacturing (Tianjin) Co. Ltd. & Others Vs. Anchor Health & Beauty Care Pvt. Ltd
Saturday, April 19, 2025
Obiter No Bar: Delhi HC Revives Passing Off Trial in Balar Marketing Case
New Delhi | March 27, 2025 — In a
significant reaffirmation of judicial discipline and statutory interpretation,
the Delhi High Court has held that obiter dicta of a High Court, especially
when not supported by reasoned analysis, cannot bind a coordinate or
subordinate bench. The ruling came in the matter of Balar Marketing Pvt.
Ltd. v. Lakha Ram Sharma, CM(M)-IPD 5/2025, decided on 27 March 2025 by the
High Court of Delhi, Neutral Citation: 2025:DHC:2322. The case, while rooted in
a trademark dispute, evolved into a wider pronouncement on the limits of
judicial precedent and the correct application of Section 124 of the Trade
Marks Act, 1999.
Trademark
Clash and Background
The petitioner, Balar
Marketing Pvt. Ltd., has been manufacturing electrical goods under the
trademarks “KUNDAN” and “KUNDAN CAB” since 1975. The respondent, Lakha Ram
Sharma, operating as Kundan Cable India, also uses similar marks—“KUNDAN” and
“KUNDAN CABLE”—for related products. This overlapping use led to a longstanding
legal tussle between the two parties, dating back to the 1990s.
The suits—TM Nos. 968/2016,
971/2016, 1030/2016, 932/2016, and 931/2016—were consolidated for trial. In
2018, the Trial Court declined interim relief to the petitioner. However, by an
order dated 30 May 2022, it permitted trial to proceed on the issue of passing
off, while staying the trademark infringement claims. The court relied on Puma
Stationer Pvt. Ltd. & Anr. v. Hindustan Pencils Ltd., 2010 (43) PTC 479
(Del) (DB), and J.K. Oil Industries v. Adani Wilmar Ltd., 2007 (75) PTC
44 (Del).
The 2025
Dispute Over Obiter Dicta
In January 2025, the
respondent applied to stay all suits, including those for passing off, citing
paragraph 44 of the Division Bench judgment in Amrish Aggarwal Trading as
Mahalaxmi Product v. Venus Home Appliances, 2024 SCC OnLine Del 3652. That
paragraph made a reference to staying proceedings involving both “infringement
or passing off” in the context of pending rectification petitions under Section
124 of the Trade Marks Act, 1999. The Trial Court accepted this argument and
stayed all suits except the one solely under the Copyright Act.
Balar Marketing challenged the
order before the Delhi High Court, contending that the reference in Amrish
Aggarwal was an obiter dicta and lacked binding authority.
The Legal
Debate: Precedent vs. Passing Observation
The petitioner argued that the
reference to “passing off” in Amrish Aggarwal was not backed by any
reasoning and therefore could not override earlier binding precedent. It was
submitted that Section 124 of the Trade Marks Act, 1999 applies only to
infringement actions, and that passing off, being a common law remedy, operates
independently of trademark registration status.
To support the proposition
that obiter dicta are not binding, the petitioner relied on authoritative
decisions including Mohinder Singh Gill & Anr. v. Chief Election
Commissioner, (1978) 1 SCC 405, State of Orissa v. Sudhansu Sekhar Misra,
AIR 1968 SC 647, and Gudri v. Ram Kishun, 1983 SCC OnLine All 415: AIR
1984 All 5.
The respondent, in contrast, defended
the Trial Court’s reliance on the Division Bench judgment. It was argued that
the observations in Amrish Aggarwal should be treated as binding, even
if made without elaboration. Reference was made to Naseemunisa Begum v.
Shaikh Abdul Rehman, 2002 (2) Mah LJ 115, and Crocs Inc. USA v. Aqualite
India Ltd., 2019 SCC OnLine Del 11957, to assert that larger bench
observations warrant judicial adherence.
The Court's
Reasoning: Drawing the Line Between Ratio and Obiter
The Delhi High Court, examining
the issue in depth, observed that the core question in Amrish Aggarwal
pertained solely to infringement proceedings during pendency of rectification
applications after abolition of the Intellectual Property Appellate Board under
the Tribunals Reforms Act, 2021. The casual mention of “passing off” in
paragraph 44 was not part of the issue framed or adjudicated and thus did not
form part of the ratio decidendi.
In reaffirming Puma
Stationer Pvt. Ltd., the Court clarified that while infringement
proceedings are stayed pending rectification, passing off claims may continue
since they do not depend on the validity of trademark registration. The Court
also highlighted Section 27(2) of the Trade Marks Act, 1999, which expressly
preserves the right to bring a passing off claim regardless of registration.
The High Court further
emphasized that judicial precedent is confined to what is expressly decided.
Citing Mohinder Singh Gill and Sudhansu Sekhar Misra, the Court
reinforced that stray observations or general remarks lacking legal reasoning
do not constitute binding law. It held that Crocs Inc. and Naseemunisa
Begum were distinguishable, as those cases involved direct adjudication of
the legal issue concerned.
Decision and
Directions
The Delhi High Court allowed the
petition and set aside the Trial Court’s order dated 18 January 2025. It held
that the reference to passing off in Amrish Aggarwal was an inadvertent
obiter dicta that could not serve as a legal basis for staying the suits. The
Court directed that all consolidated suits, particularly those concerning
passing off, proceed to trial without delay.
Legal
Position Reaffirmed
The judgment in Balar
Marketing Pvt. Ltd. v. Lakha Ram Sharma, CM(M)-IPD 5/2025, 2025:DHC:2322,
firmly establishes that Section 124 of the Trade Marks Act, 1999 does not
extend to passing off actions. It reiterates that passing off is a distinct and
independent common law remedy that continues irrespective of
registration-related disputes. Above all, it reinforces the principle that only
the ratio decidendi of a decision has binding force—obiter dicta, however
notable, cannot override statutory interpretation or precedent.
Advocate Ajay Amitabh Suman, Patent and Trademark Attorney, Delhi High Court
Friday, April 18, 2025
Property Owners Association Vs. State of Maharashtra
Cryogas Equipment Private Limited Vs. Inox India Limited
The interplay between copyright and design law in India has long been a fertile ground for legal disputes, particularly when artistic works and industrial designs converge. The Supreme Court of India's judgment in Cryogas Equipment Private Limited v. Inox India Limited, delivered on April 15, 2025, marks a pivotal moment in clarifying this complex intersection. This case, arising from a dispute over the alleged infringement of proprietary engineering drawings and literary works related to cryogenic semi-trailers, addresses the critical question of whether such works are protected under the Copyright Act, 1957, or fall within the ambit of the Designs Act, 2000. By establishing a definitive two-pronged test to distinguish between artistic works and designs, the Supreme Court not only resolves the immediate conflict between Inox India Limited and appellants Cryogas Equipment Private Limited and LNG Express India Private Limited but also sets a robust precedent for harmonizing the Copyright Act and Designs Act. This case study delves into the factual and procedural intricacies, the legal issues, the parties’ arguments, the judicial reasoning, and the broader implications of the judgment, offering a comprehensive analysis of a landmark decision in Indian intellectual property (IP) law.
Inox countered that the suit involved two distinct copyrights: the Proprietary Engineering Drawings and the Literary Works, each requiring independent assessment. They argued that the drawings were artistic works under Section 2(c) of the Copyright Act, as they depicted internal components of cryogenic containers, lacking the visual appeal required for a design under Section 2(d) of the Designs Act. Inox contended that Section 15(2) did not apply, as the drawings were neither registered nor capable of registration under the Designs Act, falling under the exception for “modes or principles of construction” or “mere mechanical devices.” They emphasized that the Literary Works, comprising processes and descriptions, were not subject to Section 15(2) and were wrongly conflated with the drawings by the Commercial Court. Inox also asserted that the theft of confidential information constituted a separate claim, actionable under common law and not barred by Section 15(2). They argued that determining the drawings’ registrability under the Designs Act involved mixed questions of law and fact, unsuitable for resolution under Order VII Rule 11. Inox supported its claims with evidence from a Local Commissioner’s Report (September 26, 2018), which found proprietary materials at the defendants’ premises, substantiating unauthorized use.
Microfibres Inc v. Girdhar, 2006 SCC OnLine Del 60: Cited by Inox and the High Court, this Delhi High Court decision involved a dispute over upholstery fabric patterns. The court held that the plaintiff’s drawings, intended for industrial use, were designs under the Designs Act, not artistic works under the Copyright Act, due to their commercial purpose and lack of independent artistic existence. The court emphasized the shorter protection period under the Designs Act compared to the Copyright Act, reflecting legislative intent to limit copyright protection for industrially applied works. In the present case, Inox used this precedent to argue that the Proprietary Engineering Drawings were artistic works, while the appellants cited it to assert their design status due to industrial application.
Microfibres Inc v. Girdhar and Co, 2009 SCC OnLine Del 1647 (Microfibres II): An appeal from the above decision, this Delhi High Court Division Bench ruling was heavily relied upon by the High Court and Inox. The court clarified that artistic works under Section 2(c) of the Copyright Act have a broad scope, including abstract drawings, but lose copyright protection under Section 15(2) if industrially applied beyond fifty reproductions without design registration. It emphasized that original artistic works retain copyright protection, but designs derived for industrial use are governed by the Designs Act. Inox leveraged this to argue that its drawings were artistic works, while the appellants used it to highlight the industrial application bar.
Dart Industries Inc v. Techno Plast, 2007 SCC OnLine Del 892: Cited by the appellants, this Delhi High Court case involved Tupperware products. The court held that copyright protection ceases once a design is registered under the Designs Act or industrially reproduced beyond fifty times, as per Section 15. The appellants used this to argue that Inox’s drawings, if industrially applied, lost copyright protection, while Inox distinguished it, noting its drawings were unregistered and not necessarily designs.
Mattel, Inc v. Jayant Agarwalla, 2008 SCC OnLine Del 1059: Cited by the appellants, this Delhi High Court case concerned the board game Scrabble. The court denied copyright protection for the game board, a three-dimensional article reproduced over fifty times without design registration, following Microfibres I. The appellants argued that Inox’s semi-trailers, similarly reproduced, were ineligible for copyright protection, while Inox contended that its two-dimensional drawings were distinct artistic works.
Bharat Glass Tube Ltd v. Gopal Glass Works Ltd, (2008) 10 SCC 657: Referenced by the Supreme Court, this case clarified the Designs Act’s purpose of protecting original designs for a limited period (ten years) to reward innovation. The court noted that designs must be new, original, and unpublished to be registrable. The Supreme Court used this to underscore the Designs Act’s focus on commercial exploitation, contrasting it with the Copyright Act’s broader protection for artistic works.
Smithkline Beecham Plc v. Hindustan Lever Ltd, 1999 SCC OnLine Del 965: Cited by the Supreme Court, this Delhi High Court case applied the functional utility test to deny design protection for a toothbrush’s S-shaped design, deemed primarily functional. The court used this to emphasize that functional works are excluded from design protection, supporting Inox’s argument that its drawings lacked aesthetic appeal.
Tractors and Farm Equipment Ltd v. Standard Combines Pvt. Ltd, 2012 SCC OnLine Mad 5470: Referenced by the Supreme Court, this Madras High Court case applied the functional utility test to a tractor design dispute, holding that the plaint could not be rejected at the threshold due to unresolved questions about functionality versus aesthetics. The court used this to support the need for a trial in the present case.
Standard Corporation India Ltd v. Tractors and Farm Equipment Ltd, 2014 SCC OnLine Mad 850: A Division Bench reaffirmation of the above, cited by the Supreme Court to reinforce the functional utility test’s application in distinguishing designs from artistic works.
Mohan Lal v. Sona Paint and Hardwares, 2013 SCC OnLine Del 1980: Cited by the Supreme Court, this Delhi High Court Full Bench decision reaffirmed Smithkline, applying the functional utility test to mirror frames, though primarily addressing passing off claims. It supported the court’s focus on functionality.
Whirlpool of India Ltd v. Videocon Industries Ltd, 2014 SCC OnLine Bom 565: Cited by the Supreme Court, this Bombay High Court case noted that functionality does not preclude design protection if alternative shapes can perform the same function, aiding the court’s analysis of aesthetic versus functional features.
Photoquip India Ltd v. Delhi Photo Store, 2014 SCC OnLine Bom 1088: Referenced by the Supreme Court, this Bombay High Court case adopted a conjunctive approach, interpreting Section 15(2) alongside functional utility. The court held that functional drawings were not designs but could be artistic works, supporting Inox’s claim.
Pranda Jewelry Pvt. Ltd v. Aarya 24 KT, 2015 SCC OnLine Bom 958: Cited by the Supreme Court, this Bombay High Court case followed Microfibres II, reinforcing the distinction between artistic works and designs.
Fun World and Resorts (India) Pvt. Ltd v. Nimil KK, 2020 SCC OnLine Ker 219: Referenced by the Supreme Court, this Kerala High Court case aligned with Microfibres II, affirming the copyright-design distinction.
TTK Prestige Ltd v. KCM Appliances Pvt. Ltd, 2023 SCC OnLine Del 2129: Cited by the Supreme Court, this recent Delhi High Court case reaffirmed the functional utility test’s relevance in design disputes.
Amp v. Utilux, [1972] RPC 103: Cited by the Supreme Court, this House of Lords decision introduced the functional utility test, distinguishing aesthetically appealing designs from purely functional ones, influencing Indian jurisprudence.
Interlego A.G v. Tyco Industries Inc, [1988] UKPC 3: Referenced by the Supreme Court, this Privy Council decision applied the functional utility test, reinforcing the aesthetic-functional distinction.
Mazer v. Stein, 347 U.S. 201, 74 S. Ct. 460, 98 L. Ed. 630 (1954): Cited by the Supreme Court, this U.S. Supreme Court case introduced conceptual separability, allowing copyright protection for artistic features separable from utilitarian functions, paralleling India’s functional utility test.
Esquire, Inc v. Ringer, 591 F.2d 796 (D.C. Cir. 1978): Referenced by the Supreme Court, this U.S. case clarified that utilitarian designs are ineligible for copyright, supporting the functional utility approach.
Kieselstein-Cord v. Accessories by Pearl, Inc, 632 F.2d 989 (2d Cir. 1980): Cited by the Supreme Court, this U.S. case introduced a primary-subsidiary approach to conceptual separability, emphasizing artistic dominance.
Carol Barnhart Inc v. Economy Cover Corp, 773 F.2d 411 (2d Cir. 1985): Referenced by the Supreme Court, this U.S. case refined conceptual separability, requiring artistic features to be non-essential to function.
Brandir International, Inc v. Cascade Pacific Lumber Co, 834 F.2d 1142 (2d Cir. 1987): Cited by the Supreme Court, this U.S. case emphasized artistic expression uninhibited by functional considerations.
Pivot Point Int’l, Inc v. Charlene Prods, Inc, 372 F.3d 913 (7th Cir. 2004): Referenced by the Supreme Court, this U.S. case reinforced the need to exclude industrial designs from copyright protection.
Galiano v. Harrah’s Operating Co, 416 F.3d 411 (5th Cir. 2005): Cited by the Supreme Court, this U.S. case introduced the marketability approach to conceptual separability, focusing on aesthetic marketability.
Star Athletica, L.L.C v. Varsity Brands, Inc, 137 S. Ct. 1002, 197 L. Ed. 2d 354 (2017): Referenced by the Supreme Court, this U.S. Supreme Court case established a clear test for copyright protection of design features, requiring separability and independent artistic value, harmonizing U.S. law and influencing the Indian approach.
Shri Mukund Bhavan Trust v. Shrimant Chhatrapati Udayan Raje Pratapsinh Bhonsle, (2024) SCC OnLine SC 3844: Cited by the appellants, this Supreme Court case was used to argue that evasive drafting cannot create a cause of action, though the court did not extensively engage with it.
The court formulated a two-pronged test to determine protection: (i) assess whether the work is a purely artistic work under the Copyright Act or a design derived from it and industrially applied, per Section 15(2); (ii) if not copyrightable, apply the functional utility test to determine if the work’s dominant purpose is aesthetic or functional, qualifying it for design protection. This test ensures harmony between the statutes, protecting artistic works while regulating industrial designs. On the second issue, the court upheld the High Court’s rejection of the Order VII Rule 11 application, finding that the Commercial Court erred in summarily dismissing the suit. The court held that determining the drawings’ nature involved mixed questions of law and fact, requiring a trial. The Commercial Court’s assumption that the drawings were designs ignored their potential artistic status and the separate claims for Literary Works and confidential information. Citing Microfibres II, the court emphasized the broad scope of artistic works and the need for detailed inquiry. The court directed the Commercial Court to apply the two-pronged test and independently assess all claims, ensuring a comprehensive resolution.
Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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