Monday, 2 July 2018

Unfaking FIFA: Battling the Ambush Marketing and Counterfeits



As the FIFA football World Cup is on the horizon, innumerable fans across the world are flying high with excitement and fervor. Russia, this year’s host country, is all set to kick off the month-long football festival which will be held from June 14 to July 15, 2018. Among other preparations, FIFA and the organizing authorities of Russia have left no stone unturned to protect FIFA’s brand from the plague of counterfeiting and ambush marketing. Recently, the International Trademark Association (INTA), a global association of trademark owners and professionals, also issued a warning for the fans and other stakeholders against such unscrupulous practices. The statement issued by INTA’s president Mei-lan Stark specifically highlighted instances of sale of counterfeit goods financing organized crimes, like inter alia the trafficking of drugs and weapons, and the money from untaxed fake FIFA memorabilia being diverted from the workers, the R&D and the funding needed to host the tournament to facilitate illegitimate businesses.[1]


FIFA’s intellectual property, which primarily consists of trademarks like logos of FIFA, World Cup, etc. and copyright in works such as emblem, mascot, official poster, etc., can be used only by companies that acquire official license from FIFA to show their legitimate association with the tournament. These licensed products bear a quality guarantee in relation to standards of product quality, ethical business practices and working conditions, which ensure that practices such as child labor are excluded.[2]  However, the market is littered with instances of “ambush marketing” wherein unauthorized entities take advantage of the brand image and goodwill of another company without contributing to its organization. Traders and producers dealing with items featuring FIFA’s official marks without purchasing the required license defeat the purpose of providing commercial exclusivity to companies that invest and associate with the World Cup. Such investment is undoubtedly crucial to the organization of the coveted tournament as it provides for the funding pertinent to maintain the high standards of organization expected by the fans. Furthermore, such illicit practices thrive on the fans’ improvidence and unawareness towards genuine FIFA merchandises and insignias for unfair commercial advantages. Hence, the fans face the risk of buying and using counterfeit products which are mostly poorly made using low grade materials and do not meet the purported safety standards. These practices adversely affect the tournament and are detrimental to the sentiment of fair play that transcends the tournament

Realizing the aforementioned risks associated with such infringements, FIFA has made preparations to implement measures, together with customs authorities across the world, to thwart the sale, trade and production of counterfeit products for FIFA World Cup 2018.  The instituted brand protection regime would be focusing on identifying infringements of FIFA’s IP rights and actively monitoring intellectual property registers across the world to safeguard and preserve its exclusivity to its brands and marketing assets. Also, FIFA’s enactment of Commercial Restriction Areas (CRAs) around the stadiums that host matches of the FIFA World Cup™ and other official sites would provide additional legal protection to the legitimate licensees against prohibited marketing activities around the stadium, unauthorized traders, counterfeit goods and ticket touts.[3]Apart from the legal measures, FIFA is also indulging in extensive awareness programs to sensitize general public, the business fraternity, ticket-holders and other potential stakeholders who may be duped or inadvertently partake or contribute to successful commission of such activities.

Though the policies enacted by FIFA certainly assure protection against the counterfeit goods, however, the battle doesn’t end here. Even the service providers, like the television companies that legally procure licenses for broadcasting the tournament, share the concern of ambush marketing. Recently, Sony warned streaming sites in India and the neighboring countries against broadcasting of the 2018 FIFA World Cup. Through emails sent to various streaming sites, Sony reiterated its exclusive right of broadcasting, re-broadcasting and transmitting World Cup matches in India, Bangladesh, Bhutan, the Maldives, Nepal, Pakistan and Sri Lanka. This was undoubtedly an essential step taken by Sony to reaffirm its exclusivity with respect to telecasting FIFA World Cup in the said countries and to remind the relevant companies to refrain from infringing upon the authorized exclusivity by streaming the competition through any platform including the internet, mobile, television and radio without Sony’s written permission. The caution notice highlighted the monitoring activities that would be taken up by the agency to check any kind of infringements and asserted its right to initiate legal proceedings (civil and/or criminal) in case of violation of the said notice.


[1] Available at https://www.inta.org/press/pages/fifaworldcup2014_en.aspx.
[2] https://www.fifa.com/about-fifa/marketing/brand-protection/protect-fifa-world-cup-brand.html.
[3] https://www.fifa.com/about-fifa/marketing/brand-protection/surveillance.html.

India: Madurkathi of West Bengal Gets a Geographical Indication (GI) Tag



Madurkathi are mats woven from a locally available soft reed called “Madur kottir”. Madur is the Bengali vernacular for floor mats. Mats are an integral part of Bengal's lifestyle. Madur is a tradition and pride of Medinipur district of West Bengal. Usually, women of the households are involved in weaving this beautiful craft. With change in the requirement of the market, the mats are now also used for making decorative and utilitarian items. Madurkathi is locally available and is found abundantly in the alluvial tracts of East and West Medinipur districts of West Bengal.

On March 28, 2018, the Government of West Bengal, was granted Geographical Indication (GI) Tag forMadurkathi’ vide registration no. 567 in respect of handicrafts. The application of registration of Madurkathi was filed by The West Bengal Khadi & Village Industry Board, Government of West Bengal. Madurkathi mats are popular and beneficial for the sitting as well as bedding purposes. The non-conducting property and ability to absorb sweat makes the mat a necessity household item in the hot and humid climate of West Bengal. These mats are also used for religious purposes.

The Government of West Bengal has previously secured registrations for handicrafts products. Details thereof are as under:

Registration No.
Geographical Indications
52
Nakshi Kantha
104
Santiniketan Leather Goods
138
Santipore Saree
173
Baluchari Saree
176
Dhaniakhali Saree
453
Bankura Panchmura Terracotta Craft
563
Bengal Dokra
564
Bengal Patachitra
565
Purulia Chau Mask
566
Wooden Mask of
Kushmandi

India: Internet and the determination of jurisdiction in the Case of Trade Mark Infringement



Introduction

Internet has marked its presence in the commercial world in an unprecedented way. With businesses moving online to escalate their accessibility to a wider range of customers in the market, it has become pertinent to address the consequent legal implications which arise due to the challenges posed by these practices to the conventional understanding of statutorily defined rights and responsibilities. One of the controversial issues in the trademark infringement cases is the determination of the court’s jurisdiction in case businesses involving online transactions. Statutorily, the Code of Civil Procedure, 1908, contains the provisions under Section 20 with respect to institution of the suits where the Defendant resides, or cause of action arises. It reads as:
Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction –
o   The Defendant, or each of the Defendants where there are more than one, at the time of the commencement of the Suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

o   any of the Defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the Defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or 

o   the cause of action, wholly or in part, arises.
Explanation: A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.[1]
The provision prima facie gives the Plaintiff a choice of forum to institute a suit.
Over the past decade, the Delhi High Court has become the hub of IP disputes. It has passed judgements interpreting the provision to determine the jurisdiction in cases where one of the parties (or both the parties) have online presence. The Court, in the case of World Wrestling Entertainment v. M/S Reshma Collection & Ors, stated that,

The website of the appellant/plaintiff is not an offer but an invitation to an offer, just as a menu in a restaurant. The invitation, if accepted by a customer in Delhi, becomes an offer made by the customer in Delhi for purchasing the goods "advertised" on the website of the appellant/plaintiff. When, through the mode of the software and the browser, the transaction is confirmed and payment is made to the appellant/plaintiff through its website, the appellant/plaintiff accepts the offer of the customer at Delhi. Since the transaction between the two takes place instantaneously, the acceptance by the appellant/plaintiff is instantaneously communicated to its customer through the internet at Delhi. Therefore, in such a case, part of the cause of action would arise in Delhi.[2]
Hence, in cases where the commercial transaction takes place over the internet, due to the spontaneous nature of the offer and acceptance of payment or consideration, the cause of action is deemed to have arisen at the place where the customer carried out his/her part of the online transaction.  In the recent case of Impresario Entertainment & Hospitality Pvt. Ltd. v S&D Hospitality, the Court further clarified its position on jurisdiction for the cases where businesses have online accessibility. The position taken by the Court in this case deviates from its stance in the previous cases. In the case of Renaissance Hotel Holdings, Inc. v B. Vihaya Sai[3], the Court refused to entertain the suit on the basis that online booking from Delhi of a hotel room situated in USA or situated at Bangalore, the jurisdiction of the High Court of Delhi cannot be invoked. Hence, the judgement in the case has re-defined the trend to be followed by the Courts in such cases.

Impresario Entertainment & Hospitality Pvt. Ltd. V S&D Hospitality

Contentions:
In this case, the Plaintiff contended that since the Defendant’s services are available on websites like Zomato and Dine-Out, the customers can book the Defendant’s restaurant at Delhi as well. Due to this reason, the cause of action can be said to have arisen in Delhi for the purposes of jurisdiction of the Court. To the contrary, the Defendant argued that the Court had no territorial jurisdiction to entertain the suit as “mere booking or placing an order through internet is insufficient to say that any transaction took place since the contract formation is not at the place of booking or ordering the product or service.[4] It was argued that without proof of ‘the effect’ (Effect test), the territorial jurisdiction of the Court cannot be established.
Judgement:
At the outset only, the Court clarified that that the mere accessibility of the Defendant’s website at a place would not enable the Court to exercise its territorial jurisdiction over the dispute. The Court also distinguished the facts from the World Wrestling Entertainment case as in the present case only reservation for dining at the Defendant’s restaurant at Hyderabad could be made at Delhi. The transaction by acceptance of offer could take place only when the person making the reservation goes to Hyderabad and eats at the Restaurant. Hence, merely reserving a table in the Defendant’s restaurant at Hyderabad would not amount to commercial transaction over the internet as discussed in the World Wrestling Entertainment case.
Tests:
For the determination of jurisdiction where the Defendant is sought to be sued on the basis that its website is accessible in the forum state, the Court laid a few requirements that the Plaintiff has to fulfill in order to establish that the forum court has jurisdiction to entertain the suit. They are as follows:
  • Nature of Defendant’s online activity:
          It is required to be shown that the nature of the activity indulged in by the Defendant by the use of the website was with an intention to conclude a commercial transaction with the website user. 
  • Interactive website:
          The website hosted by the Defendant is required to be an active or interactive one. An interactive website is the one where business transactions can be conducted over the internet or if information can be exchanged with users for the purpose of soliciting business. On the other hand, a passive website is akin to an advertisement and hence is used to post information for potential customers. It does not have the feature for interaction between the two parties for soliciting business.
  •  Purposeful “Avoidance” Test:The purposeful availment test states that “where the Plaintiff is not carrying on business within the jurisdiction of the forum Court, the Plaintiff is required to show that the Defendant purposefully availed itself of the jurisdiction of the forum court.” Though the Court did not accept this test relied upon by the counsel for the Plaintiff but modified it to evolve the test of "purposeful avoidance". The test of purposeful avoidance holds that the Defendant may show in his defence how he avoided the forum state, however, the initial burden will be on the Plaintiff to show that the Defendant "purposefully availed" itself of the jurisdiction of the forum court. In such cases, hence, filters to block access to the website by viewers will be taken into consideration by the Court. 
  • Conjunctive application of “Effects” and “Sliding scale” test:
          Various tests have been evolved to address the issue of Court’s jurisdiction for businesses with online presence. The "effects" test was evolved in the U.S case of Calder v. Jones[5]. In this case, a magazine called the National Enquirer published an allegedly defamatory article concerning a California resident who was a part of the entertainment business. While the article was written and edited in Florida, the Court found the “effects” of the Defendant’s "intentional, and allegedly tortious actions were expressly aimed at California” as the article concerned a California resident with a career in California and relied on California sources. The Court held that since the effects of the Defendants' conduct was in the state of California, the Court’s jurisdiction could be established. 

        However, the Court did not use the "effects" test in isolation and rather applied it in conjunction with another test called the "sliding scale" or the “Zippo” test. The test evolved in the case of Zippo Manufacturing Co. v. Zippo Dot Com, Inc. in which the Federal Court held that:

       "the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet.”[6]

         Hence, greater the commercial nature and level of interactivity associated with the website, the more likely it is that the website operator has "purposefully availed itself" of the forum state's jurisdiction. The degree of interactivity can be gauged from the website's features and intended uses. Therefore, the Court reiterated the test laid down in the Banyan Tree Holding (P) Limited v. A. Murali Krishan Reddy[7] and held that:                                
    i.    The Plaintiff is required to show that an injurious effect has been felt by the Plaintiff within the forum state where the Plaintiff is located.                             
    ii.   If the Plaintiff is not located within the jurisdiction of the Court, the injurious effect on the Plaintiffs business, goodwill or reputation within the forum state as a result of the Defendant’s website being accessed in the forum state would have to be shown. This would require the presence of the Plaintiff in the forum state and not merely the possibility of such presence in the future.


Criticism

On March 5, 2018, the Delhi High Court, in the case of Millennium & Copthorne International Limited v Aryans Plaza Services Private Limited & Ors., while relying on the Impresario case, highlighted some inconsistencies in the tests laid down by the judgement. Justice Rajiv Sahai pointed out the inherent problem in applying the test of targeting with the requirement of an interactive website. He stated that,
“Per my understanding, an interactive website cannot be targeted to any particular city or State of India and would be identically accessible throughout, at least India, wherever the reach of internet is. In fact, I have been asking this question in several cases but have not got any reply thereto.”[8]
Further, unlike the distinction drawn out between making reservation and actually carrying out a transaction in the Impresario case was questioned by the Court. The judge opined that:
“The Courts at Delhi will have jurisdiction over subject matter of suit owing to defendants having interactive website accessible at Delhi and enabling defendants situated outside Delhi to carry on business at Delhi.”[9]
With respect to reservation and booking from a website, the Court held that:
“Certainly, making a booking/reservation, even if the same does not subsequently materialize, is part of carrying on business, inasmuch as the hotel which has taken the booking, even if has not received any payment, being unable to turn back a customer if shows up in pursuance to such booking.”[10]
On these grounds, the Court dismissed the application for rejection plaint under order 7 rule 11 filed by the Defendants stating that it had the required territorial jurisdiction to entertain the suit.


[1] Section 20, Code of Civil Procedure, 1908.
[2] 2014 (58) PTC 52 (Del).
[3] 2009 (39) PTC 547(Del).
[4]  2018(73)PTC275(Del), ¶10
[5] 465 U.S. 783 (1984).
[6] 952 F. Supp. 1119(1997).
[7] 2010 (42) PTC 361 (Del).                                                                                                           
[8] 2018 (73) PTC 275(Del), pg. 3.
[9] Id. at pg 4.
[10] Id.

India: Delhi High Court dismisses Saregama’s infringement suit against Eros Digital




Last year, on October 2017, in the case of Saregama India Ltd Vs. Eros Digital FZ LLC & ANR[1]., pertaining to infringement of Copyright, the Delhi High Court stated that since it has no territorial jurisdiction to entertain the suit, relief as claimed cannot be granted by it and the plaint has to be returned to Saregama India Ltd. (herein after referred to as Plaintiff) for presentation before the Court of competent jurisdiction i.e. High Court of Calcutta.

Brief Background


In the above case, the Plaintiff has acquired rights in numerous songs, including regional and Hindi film as well as non-film sound track music from the respective producers. The Plaintiff is also the owner of copyright in the musical works (musical compositions) as well as the literary works (lyrics) embodied in the said sound recordings which were assigned to it by the producers of the respective sound recordings. The Plaintiff holds the exclusive right to ‘grant a license’ or ‘authorize the doing’ of any of the acts provided for in the Copyright Act, 1957 (hereinafter referred to as the ‘Act’).

The Plaintiff entered into a Content Licensing Agreement dated July 13, 2015, with Eros Digital FZ LLC (hereinafter referred to as the Defendant) whereby they were granted a non-exclusive license to exploit the copyrighted works of the Plaintiff through the Defendants website, ‘www.erosnow.com’ and their mobile application ‘ErosNow’.

According to the License Agreement, the Defendant was permitted to use the Plaintiff’s content of ‘streaming’ and ‘online caching’ wherein the latter permitted the end users i.e. clients of the Defendants to access the temporary copies of the Plaintiff’s works in cache memory of internet enabled devices.

Contentions by the Plaintiff 

  1. The Content License Agreement was granted for a period of 24 months effective from July 13, 2015, and, as per the terms of it the Defendant No. 1 was required to pay the Plaintiff a Minimum Guarantee Amount of INR 9,50,00,000 (USD 1425475 approx.). Further, he was also liable to pay a streaming fee of 0.14 per stream in case the value of the utilization of the Plaintiff’s works exceeded the Minimum Guarantee Amount.
  2. The Defendants did not pay the installments on time for which they were served with various notices. Meantime, the license has now come to an end by passage of time on July 12, 2017, for which, it was alleged that, the Defendants are guilty of copyright infringement due to default in making payment to the Plaintiff. Further, the Plaintiffs contended that, the Defendants continue to infringe the copyright on account of continued exploitation of the work despite expiry of the agreement.
  3. Defendant is in default of payment of INR 6,12,50,000 (USD 918979 approx.) besides interest and penal interest. The Plaintiffs further contended that the Defendants are in process of selling their business to the third parties. Since both the Defendants are based out-side India, grave hardship and significant damage would be caused to the Plaintiff if immediate steps to restrain them from selling the business were not taken. 

Contentions by the Defendant


1.      The Defendant sought time to file response to the application and, denied the Plaintiff’s allegations.

Decision 

  1. The Court held, in the instant case that Clause 29 of the agreement is clear and unambiguous. The Courts in Calcutta alone has jurisdiction, to which the parties by this clause would bound themselves in any matter arising between them, under the said License Agreement. Once parties bound themselves as such, it is not open for them to choose a different jurisdiction as such, as the suit would be in violation of the said agreement.
  2. It is relevant to note that in the plaint, the Plaintiff did not aver at all that the license agreement was executed at Kolkata. And, it was also not revealed that the installments were paid in the bank account maintained by the Plaintiff at Kolkata.
  3. Since the Court has no territorial jurisdiction to entertain the suit, relief as claimed cannot be granted by this Court. The Plaintiff will have to approach the Court of competent jurisdiction to avail the relief claimed.


[1] CS(COMM) 625/2017