The Fight over “Indigo” trademarks

Two giant companies namely, Tata Motors and Interglobe Aviations (IndiGo Airlines) have locked horns over trademark altercation involving the word Indigo. Indian Business Daily, Economic Times on August 22 reported that Interglobe Aviation faces ownership risk as Tata Motors has claimed that Interglobe’s use of IndiGo name is an infringement of its registered trademark Indigo which it uses for its Sedans since 2002.

Reportedly, the alleged trademark row had sparked off in 2005 itself, however Interglobe was subsequently successful in registering its trademarks. At present Tata Motors is opposing various trademarks of Interglobe- IndiGo, IndiGo Airways, IndiGo Airlines and IndiGo Air.

Trademark Tryst in the case

Indigo Marks of Tata Motors and Interglobe Aviation

Tata Motors

Interglobe Aviation

From the aforesaid, Tata Motors is prior filer of the term Indigo i.e. Tata applied for the mark in 2001 whereas Interglobe Aviation applied for the mark in the year 2004. Other noticeable factor is that Tata’s mark Indigo is for land vehicles falling under class 12 whereas Interglobe’s mark Indigo is for transport, packaging and storage of goods falling under class 39.

Under the Indian Trademark Law, a trademark registered for particular good and services prima facie does not have a valid infringement claim against another trademark registered for different goods and services. However, under the Trademark Act, a well-known trademark is protected even for goods and services falling in different classes. This extraordinary protection is granted to well-known marks.

In the instant case, Tata’s mark Indigo as well as since 2005 Interglobe’s mark IndiGo have become well known in their respective industries, leading to an interesting tussle between the two giants.

Speed Breakers Installed by The Delhi High Court for Audi over Trademark “T.T.”

Image Source: http://www.audi.in

On July 21, 2015, the Hon’ble High Court of Delhi, in Rikhab Chand Jain & Anr. v. Audi A.G., has granted an ad-interim ex-parte injunction against Audi AG restraining them from using the trademark “T.T.” or any other trademark deceptively and/or phonetically similar to the Plaintiff’s trademark, pending the final outcome of the case.

Brief facts of the case:

1. Rikhab Chand Jain and his firm, T.T. Industries (the Plaintiffs) filed a suit for infringement alongwith an application for ad-interim injunction against Audi AG (the Defendant) for infringing its registered trademark “T.T.”.
2. The Plaintiffs claim to be the registered proprietors of the trademark “T.T.” in various classes and have been using this trademark since 1968, the first registration being in 1970.
3. The Plaintiffs claim to have become aware of the Defendant using the trademark “T.T.” to promote various products such as leather and imitations of leather goods made of animal skins, hides; products such as trunks and travelling bags, umbrellas, parasols and walking sticks, whips, harness and saddler, games and playthings, model cars, gymnastic and sporting articles, decorations for Christmas trees.
4. Hence, the Plaintiffs filed the said suit for trademark infringement against the Defendant.
5. Pertinently, the Plaintiffs have also opposed several applications as well as filed rectification applications against the Defendant for the mark T.T. in multiple classes.

Plaintiffs’ Contentions:

1. Plaintiffs have been using the trade mark “T.T.” since 1968 and has got 87 registrations for the said trademark, earliest registration stated to be in 1970.
2.  The Plaintiffs have contended that they are the registered proprietors of the trademark “T.T.” in India, and the originator, bona fide adopter and prior user of the same in respect of various goods and services coming under different classifications of the Fourth Schedule to the Trade Marks Rules, 2002
3. The trade mark “T.T.” of the Plaintiffs is a well-known multi product global brand in 65 countries across the world.
4.  The Plaintiffs have spent Rs.7,57,84,961 for the period April 2012 - March 2013 on the promotions of the said trademark and their turnover for the same for the period April 2013 - March 2014 is Rs.7,54,57,26,494.

The Defendant was ex-parte in this order.

Observation and Decision of the Hon’ble Court:

  The bench comprising of Hon’ble Mr. Justice Najmi Waziri,after hearing the contentions of the Plaintiffs and relying upon the evidence put forward by them held the following:–

1. Grant an ad interim ex-parte injunction in favour of the Plaintiffs as they were successful to prove a prima-facie case in their favour, and they will suffer irreparable losses if the injunction not granted, and the balance of convenience also lies in their favour.
2. The Defendant i.e. Audi AG is restrained from manufacturing, selling, offering for sale, advertising, dealing directly or indirectly dealing in goods bearing the trademark “T.T.” or any other trademark which is deceptively similar and/or phonetically similar to the Plaintiffs’ trademark
3. The Defendant i.e. Audi AG be also restrained from reproducing the trademark “T.T.” in any manner on the goods manufactured by them or on stationary, letter heads, guarantee cards, packing materials used by them.

    The aforesaid order dated July 21, 2015 of the Hon’ble High Court of Delhi can be accessed by clicking here. 

Conclusion

      Trademark infringement suits have become very common and in the present case even Audi AG, which is a highly popular global brand itself, has been caught unawares on the less preferred side of a trademark infringement suit. However, on the strength of their global brand, Audi AG is likely to fight back with a bang.

CGPDTM Publishes Guidelines for Examination of Computer Related Inventions

On August 21, the CGPDTM (Controller General of Patents, Designs and Trademarks) published the Guidelines for Examination of Computer Related Inventions (CRIs). According to the notice, the Guidelines have been published pursuant to extensive consultation with stakeholders.

The notice further provides that pursuant to the aforesaid publication of Guidelines Chapter 08.03.05.10 of the Manual of Patent Office Practice and Procedure which comprises of the provisions pertaining to Section 3(k) of the Patents Act stands deleted and replaced as under:

“For procedure of examination of patent applications relating to the field of computer related invention under Section 3(k), the provisions of Guidelines for Examination of Computer Related Inventions shall be applicable.”

The Guidelines in detail can be accessed at

http://www.ipindia.nic.in/iponew/CRI_Guidelines_21August2015.pdf .

Google in an Alphabet soup !!

Sundar Pichai, was recently announced as the next CEO of Google as part of the company’s announcement that it will transition into a holding company called Alphabet Inc.

Larry Page, the co-founder of Google Inc., the American multinational company, announced on August 11, 2015, creation of a new parent company, Alphabet Inc. through a blog post. This basically means that Alphabet will be the parent company to Calico, Google Ventures, Google Capital, Life Sciences, Google X, Google Fiber, and Nest Labs including Google, Inc. itself.  

The interesting thing to note here is that the German Automaker BMW already has subsidiary companies under the name Alphabet which provide services to companies with vehicle fleets, operates in 18 countries and supply 530,000 vehicles to corporate customers. Examples of the Alphabet companies are given below:

However, the word Alphabet is very common and used by various companies in the United States. A global brand database search revealed that there are several trademark registrations all over the world for the name/mark ALPHABET and variations thereof including trade mark registrations owned by Bayerische Motoren Werke Aktiengesellschaft (BMW) in countries such as United States, Australia, Canada, Singapore, Mexico, New Zealand, India etc. Details of the BMW Group registrations for the trade mark ALPHABET and variations thereof in India are given below:

Other applications/registrations for the mark ALPHABET in various classes:

As per the news reports, the German car maker that owns the trade mark Alphabet is reviewing whether Google has committed trade mark infringement. However, the spokeswoman said that currently there are no plans of taking legal action against Google. In order to establish a case of trademark infringement, BMW Group would have to show that the use of the company name Alphabet by Google creates a "likelihood of association/confusion" among consumers between the two brands. However, this would be proved if both the brands offered similar goods and services, whereas it is not so.

However, Mr. Larry Page, Google co-founder and CEO of the new Alphabet, has made it clear in the announcement that they do not intend to use Alphabet as their brand name and only as the name of their parent company under which all other companies would function independently and develop their own brand identity. Therefore, a legal dispute is not very likely to occur.

According to Mr. Page, the reason behind adoption of the name/ mark ALPHABET was that the alphabet represents language, one of humanity's most important innovations, and is the "core of how we index" in a Google Internet search.

Domain <abc.xyz>

Moreover, as the domain <alphabet.com> has already been registered and is being used by the BMW Group, Google acquired a unique domain <abc.xyz> for its parent company. The rights to <abc.xyz> were bought from Mark Monitor which registered the address in March 2014. The top level domain .xyz used by Alphabet’s website was recently introduced in the year 2014 by Mr. Daniel Negari, who is ICANN’s youngest registry operator.

Since Google acquired the domain <abc.xyz>, the registrations on the “.xyz” domain have increased by more than 27, 000 according to the website ntldstats.com.

However, reportedly BMW does not have any plans to sell the domain <alphabet.com> to Google.

Latest in Maggi Fiasco: Government Sues Nestle for Unfair Trade Practices

The recent twist in the Maggi fiasco has again landed Nestle in troubled waters as the Government has sued Nestle for Rs. 639 crores over alleged unfair trade practices.

Indian Daily, The Hindu on August 12 reported that the Government had filed a class action suit against Nestle seeking Rs. 639 Crores in damages for alleged unfair trade practices, false labelling and misleading advertisements.

Since April, 2015 Nestle has been in rumpus over allegations of Maggi noodles containing lead and monosodium glutamate (MSG) in excess of permissible limits. Subsequently, Maggi noodles have been banned in several Indian states. Moreover, Bollywood superstars like Madhuri Dixit, Amitabh Bachchan and Preity Zinta who endorsed Maggi noodles were also served with legal notices for misleading advertisements.

Reportedly, the recent move of Government comes as a result of the impugned product misleading public by claiming Maggi to be healthy for children and the claimed damages include penal damages and takes into account annual profit and sales of the company through its entire range of Maggi products.

As per the reports, if the Government wins the case then the entire amount of damages would be assigned to the Consumer Welfare Fund under the Consumer Affairs Department which would be used for the welfare of consumers.

Bombay High Court Lifts Ban on Maggi

On one hand where Government is suing Nestle and claiming hefty penalty from it on the other hand Bombay High Court has ruled in favour of Maggi on August 13 in the case of M/s Nestle India Limited v. The Food Safety and Standards Authority of India and Ors. (Writ Petition (L) No. 1688 of 2015). The Court in the case set aside the ban order imposed by FSSAI on Maggi noodles and remarked the impugned order as ‘arbitrary, unjust and violative of Article 14 of the Constitution’.

The Bench has also directed re-testing of Maggi samples on the grounds that labs in which samples were earlier tested were not authorized to test for lead and mandatory testing procedure were also not followed.

Conclusion

Nestle definitely has reasons to cheer as well as weep. Nestle Maggi noodles a leading edible product in India has faced a lot of turbulence in the recent months and its fate still remains undecided. Though the recent order of Bombay High Court raises significant concerns regarding testing procedures and methods followed by the food regulator in India.

Indian Daily, Indian Express reports that if re-testing of Maggi noodles as directed by the Bombay High Court is cleared by the Court then Nestle may consider filing a defamation suit against FSSAI for allegedly acting in an arbitrary and non-judicious manner in the matter.

Sources:

http://www.thehindu.com/news/bombay-hc-lifts-ban-on-maggi/article7534326.ece

http://www.thehindu.com/news/national/govt-sues-nestle-for-rs-639-crore/article7527353.ece

http://indianexpress.com/article/blogs/the-maggi-verdict-could-be-bad-news-for-fssai-heres-why/

Supreme Court of India: Section 85 of the Trademarks Act held Unconstitutional!!

Vide order dated July 27, 2015, the Hon’ble Supreme Court of India, has upheld the judgement dated March 10, 2015 of the Hon’ble Madras High Court in writ petition, W.P No. 1256 of 2011, declaring Section 85 of the Trade Marks Act, 1999 regarding the qualification and selection of members appointed to the Intellectual Property Appellate Tribunal (IPAB) as unconstitutional, being contrary to the basic structure of the Indian Constitution.

The Union of India filed Special Leave to Appeal (C) No(s). 18142/2015 (hereinafter “the SLP”) against the judgement/order dated March 10, 2015 in W.P No. 1256 of 2011 passed by a division bench of the Hon’ble Madras High Court, praying for the said judgement to be have quashed/set aside. However, the Hon’ble Supreme Court was pleased to dispose of the SLP by the following order;

“We do not find any legal and valid ground for interference. The special leave petition is dismissed.”

Vide our newsletter dated April 13, 2015 we have given an analysis of the aforementioned judgement dated March 10, 2015 of the Hon’ble Madras High Court in W.P No. 1256 of 2011 which may be accessed here for further information.

Conclusion

Hence, the Supreme Court has upheld the Madras High Court’s order declaring the provisions regarding appointment of members to the IPAB as unconstitutional, it is now up to the legislature to take the necessary steps to bring the law in line with the Indian Constitution and the functionality of the IPAB may be temporarily affected due to this shift in the law.

What the future holds is yet to be seen.

Pecuniary Jurisdiction of the Delhi High Court raised to 2 crores

On August 05, 2015, the Parliament of India passed the Delhi High Court (Amendment) Bill, 2015 to enhance the pecuniary jurisdiction of civil suits in the High Court of Delhi from the existing Rs. 20 lakh to Rs. 2 crore. The purpose of the Bill is to reduce the workload of the High Court and distribute the burden to the lower courts.

Pecuniary jurisdiction refers to the jurisdiction of a court over a suit based on the amount or value of its subject matter/ damages claimed.

The aforesaid Bill was already passed by the Rajya Sabha (Upper House) earlier this year on May 06, 2015. It has now been adopted by a voice vote in the Lok Sabha (Lower House).

General Implications of the Bill

The implication of the amendment Bill is three-fold:

1. Once the Bill is implemented, the Chief Justice of the High Court will be empowered to transfer any pending suit valued upto Rs 2 crore to the concerned lower court. According to the information submitted by the Registrar General of the Delhi High Court to the Parliamentary Standing Committee, there are 12,211 such pending cases at present. They will be transferred to the concerned district courts, and eight judicial officers who are on deputation as Joint Registrar (Judicial) to the High Court will be repatriated to district courts to deal with the cases.
2. The implementation of the Bill would also considerably reduce the workload, pendency of cases and backlogs of the High Court of Delhi.
3. Most importantly, people hailing from distant areas will also get relief as they will no longer have to travel all the way to the High Court, and can now seek relief in the concerned district courts itself. It will bring the judiciary closer to the litigant public and cut the cost of litigation, as the cost of hiring a district court lawyer is much less than that of engaging a High Court counsel.
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Valganciclovir Patent Revoked after Post-Grant Opposition

Facts of the case

• Valganciclovir, manufactured by Hoffman- La Roche, is an anti-retroviral drug used for the treatment of active cytomegalovirus retinitis (CMV) infection.
• Roche was granted patent (207232) entitled “2- (2-AMINO-1,6-DIHYDRO-6-OXO-PURIN-9-YL)METHOXY-1,3-PROPANEDIOL DERIVATIVE’ on July 27, 1995 covering L- Valinate Ester of Gancyclovir and all acceptable salts in oral form with increased bioavailability.
• In May 2010, Controller had revoked the patent on grounds that it was obvious and did not satisfy the requirements of Section 3(d) of the Patents Act, 1970 in response to the oppositions filed by the Indian Network of Positive People (INP), the Tamil Nadu Network of Positive People (TNNP), the Delhi Network of Positive People (DNP) and generic companies. The details of the Post-grant opposition can be found on our website.
• Roche challenged the decision by filing an appeal with the Intellectual Property Appellate Board (IPAB). INP and TNNP also filed an appeal against the some of the Controller’s findings. Both appeals came up for hearing on January 30, 2014.
• The IPAB then set aside the Patent Controller’s  decision to revoke the patent relating to valganciclovir on technical grounds and remanded it to the Controller for re-consideration.
• The controller revoked the Indian Patent No. 207232 pertaining to Valganciclovir in the order dated July 01, 2015.

The Controller’s order

i)     Experts’ opinion

The patentability of the drug was the issue in the Controller’s order. The Controller noted that the three main aspects of determining patentability were disclosure, relevant prior art and judgments available at the time of deciding the case. The issue before the Controller was whether expert evidence was prior art publications or disclosures. The Controller held that the view of the expert is only a personal opinion on the given subject matter, but it is never a conclusion arrived after continuous research work in the specific area.

Therefore, expert evidence is not a prior art document to be relied upon for deciding a case, but it may be considered for understanding the prior art documents,

ii) Prior arts cited- EP 0375329 (EP’329)

1. Acyclovir and Gancyclvovir are similar in structure and function targeting similar diseases (anti-viral). It is known that acyclovir is poorly absorbed and large doses are required to increase its bioavailability. If Acyclovir is esterised, its bioavailability is increased when administered orally. EP’329 mentions several amino acids which can be used to result in the L-valinate ester of Acyclovir called Valacyclovir. Adding Hydrochloride to acyclovir yields L-valinate ester of Acyclovir called Valacyclvoir (sold as Valtrex, an anti Herpes drug by GSK).
2. L-Valinate ester of Gancyclvovir in the intra-venous form is already in the market against anti-viral diseases (mainly HIV infections).
3. In order to increase the bioavailability a person skilled in the art would have been motivated to come up with an oral form of the compound by following the step of esterization of Gancyclvovir resulting in the L-valinate ester of Gancyclovir (namely Valgancyclovir) and later, a combination with hydrochloric acid to result in Valgancyclovir Hydrochloride (sold as Valcyte by Roche).

iii)                Bioavailability

The next issue to be discussed is whether the improvement of oral bioavailability constitutes enhancement of the known efficacy of that substance. The Controller ruled that while bioavailability is one of the factors affecting efficacy, it cannot be directly equated to efficacy. The Controller ruled that the present patent was a ‘mere use of a known process’ which was not patentable under S. 3(d) of Indian Patents Act.

As a result, for all these reasons, the Controller revoked the patent granted to Valganciclovir.

The Controller’s order can be found on the below link:

https://drive.google.com/file/d/0B0gcTBXFLYKULUJtQ0s4YTJlcERKNDhk

Ry1uQy1Qb29pcWk4/view?pli=1

Hyundai slapped with a fine of Rs. 420 crore by Competition Commission of India

The Competition Commission of India (CCI) on July 27, 2015 passed an order imposing a hefty penalty of Rs. 420 crore  on leading automobile company Hyundai Motors India Ltd., for violating the provisions of Competition Act 2002.

Brief Facts of the Case

Shri Shamsher Kataria (hereinafter referred to as the Informant) initially filed an information under Section 19 (1) (a) of the Competition Act 2002, against automobile manufacturers Honda Seil Cars India Ltd., Volkswagen India Pvt. Ltd and Fiat India Ltd. alleging anti-competitive practices on the grounds that the genuine spare parts of automobile manufacturers by them were not made freely available in the market;

• The CCI after considering the matter directed the Director General (DG) to conduct an investigation and submit the report;
•  During the said investigation the DG was of the opinion that other automobile manufacturers may also be indulging in unfair practices, and they all should also come under the ambit of the said investigation;
•  CCI after the completion of the said investigation imposed a penalty of Rs. 2545 Crores on 14 car manufacturers in India in August last year. However, no order was passed against Mahindra Reva Electric Car Company (P) Ltd. (hereinafter, referred to as “Reva”), Premier Ltd. (hereinafter, referred to as “Premier”) and Hyundai Motors India Ltd. (hereinafter referred to as Hyundai) as Reva and Premiere had filed applications for striking out of their names from the array of parties and Hyundai had filed a writ petition in the Madras High Court, challenging the jurisdiction of CCI, wherein the Court granted Hyundai an ex parte stay in the matter;
• In view of the aforesaid, CCI in the matter could not proceed against Reva, Premiere and Hyundai and the order of CCI remained pending against them and held that it would pass separate order in respect of three car manufacturers, viz., Hyundai, Reva and Premier after affording them reasonable opportunity to make their submissions in respect of the findings of the DG report and queries raised by the Commission.

Findings of the DG with respect to Hyundai

1. That Hyundai entered into a technology and royalty agreement with HMC (Hyundai Motor Company, South Korea) for supply of spare parts for its operations in India and the fact that the overseas supplier is the parent company of Hyundai and only supplies spare parts to MIL (a group company of Hyundai for dealing with aftermarket requirements in India), indicates the existence of an arrangement between Hyundai and the overseas supplier for not supplying spare parts directly into the Indian aftermarket;
2. That Hyundai’s basic purchase agreement (entered with the OESs for supply of spare parts) indicate restriction on OESs (Original Equipment Suppliers) from supplying spare parts directly to the aftermarket;
3. That dealers refused to sell spare parts in the open market and spare parts of only certain car models were made available over the counter;
4. That authorized dealers were being permitted to source spare parts from Hyundai directly or from its authorized vendors but not from the OESs;
5. That during the warranty period, owners of Hyundai cars are totally dependent on its authorized network as the warranty extended is liable to be invalidated if a Hyundai car is repaired by an independent repairer;
6. That Hyundai’s dealers are not permitted to deal with competing brands without seeking the prior permission of OEM (Original Equipment Manufacturer);
7. That Hyundai has justified its restrictions on the basis of IPR and safety issues but it has failed to establish that it possesses valid IPRs in India, with respect to its spare parts for which restrictions were being imposed upon OESs.
8. That refusal to supply diagnostic tools and spare parts by Hyundai to independent repairers amounts to denial of access to an “essential facility”;
9. That the restrictions imposed upon the OESs and the authorized dealers, coupled with the restrictions on independent repairers amounts to not only imposition of unfair terms under section 4(2)(a)(i) of Competition Act but also denial of market access under section 4(2)(c) of the Act;
10. That in view of aforesaid, the acts of Hyundai are in violation of Section 3(4)(c) and 3(4)(d) of the Act, for not allowing its authorized dealers to deal with competing brands of cars and not allowing them to sell spare parts and diagnostic tools to the independent repairers;

Reply of Hyundai:-

1. That the DG has drawn incorrect conclusions and erred in the application of competition law and established competition law principles;
2. That Hyundai is not dominant in any of the relevant markets and has not engaged in any conduct which would be an abuse of dominant position under the Act.
3. In addition, Hyundai has not imposed any condition or engaged in any conduct that would constitute an infringement of Section 3 of the Act relating to anti-competitive agreements;
4. That Hyundai had a large and one of the most accessible service and sales network as compared to other car manufacturers in India with 412 dealers and more than 1,087 service points located across India;
5. That the unorganized sector in India is characterized by a lack of skills and proper training because independent repairers are averse to investing in training themselves for repairing of high end and executive premium cars. Further the absence of any effective government regulation and the problem of counterfeits are the major challenges being faced by the OEMs like Hyundai in the Indian market;
6. That DG had incorrectly relied upon the developments in USA and EU, with respect to after-market services without considering the differences and dynamics of Indian Automobile Industry;
7. That Hyundai’s agreements with its OESs are basically subcontracting arrangements and as such exclusivity in such arrangements fall outside the purview of Section 3 of the Act as such exclusivity is required to protect Hyundai’s significant investments in developing its OESs and contributions to the manufacture of spare parts;
8. That even if the sub-contracting agreements are found to fall within the scope of Section 3, the designs, specifications, drawings and technologies provided by Hyundai to its OESs are protected by unregistered copyright and trade secret;
9. That Hyundai’s drawings/know-how/specifications would also be conferred with IP protection by virtue of them being confidential information and reference could be made to the case of Cattle Remedies and Anr. vs. Licensing Authority/Director of Ayurvedic and Unani Services, wherein it had been observed that apart from specific statutes relating to trade mark, copyright, design and patent, even trade secrets are also a form of IP;
10. That Hyundai encourages over the counter sale of spare parts and diagnostic tools by authorized dealers, dealer’s branch and Hyundai’s authorized service centres and does not prohibit its dealers from taking competing dealerships and that a number of its dealers have competing dealerships;

Decision of the Commission:-

The CCI passed its order with respect to the automobile manufacturers Hyundai, Reva and Premier (hereinafter referred to as ‘car manufacturers’) and made the following observations in the matter:

1. That considering the technical compatibility between the products in the primary market and the secondary market, car manufacturers hold 100% market share and are dominant in the aftermarket of their respective genuine spare parts and diagnostic tools and correspondingly in the aftermarket of their respective repair services for their brand of automobiles;
2. That warranty conditions that the car manufacturers impose on their consumers dissuade them from availing the services of independent repairers, therefore, they hold a position of strength which enables them to affect their competitors in the secondary market and limiting consumer choice;
3. That conduct of car manufacturers amounts to denial of market access to independent repairers to procure genuine spare parts in the aftermarket;
4. That the practice of car manufacturers in denying the availability of its genuine spare parts severely limits the independent repairers and other multi-brand service providers in effectively competing with the authorized dealers of the OEMs in the aftermarket which amounts to denial of market access by the OEMs under section 4(2)(c) of the Act;

IPR exemptions under the Act

That the license agreement entered into between Hyundai and HMC did not specify the technologies, patents, knowhow, copyrights and other IPRs which are being granted to Hyundai.That as per the observations of the DG and submissions made by car manufacturers, none of them own any registered IPR on any of their spare parts as such in India. It has been admitted by Hyundai and MIL that they do not possess any valid IPRs in India except for its trademark/logo.

That though registration of an IPR is necessary, the same does not automatically entitle a company to seek exemption under section 3(5) (i) of the Act. The important criteria for determining whether the exemption under section 3(5)(i) is available or not is to assess whether the condition imposed by the IPR holder can be termed as “imposition of a reasonable conditions, as may be necessary for the protection of any of his rights”.

That mere selling of the spare parts, which are manufactured end products, does not necessarily compromise upon the IPRs held by the OEMs in such products. Therefore, the OEMs could contractually protect their IPRs as against the OESs and still allow such OESs to sell the finished products in the open market without imposing the restrictive conditions.

That trade secrets and confidential knowledge, are not among the listed categories of IPR laws and hence Hyundai cannot claim any exemption under section 3(5)(i) of the Act;

In view of the aforesaid observations, the CCI held that the car manufacturers have restricted the sale of spare parts over the counter, thereby resulting in prescribing exclusive distribution agreements and refusal to deal in terms of Section 3(4) (c) and 3(4) (d) of the Act and these agreements were found to be in the nature of exclusive supply agreements in terms of Section 3(4)(b) of the Act.

The CCI directed the car manufacturers to cease from indulging in such restrictive trade practices and imposed a penalty of Rs. 420 Crores on Hyundai.

Conclusion

The present order condemns the prevalent conduct of car manufacturers of entering into exclusive supply agreement for supply of spare parts which limits the choice of customers and also leads to unfair trade practices in the relevant market.