The Startup is Staying Up! – DIPP Notifies Amended Definition of Startups in India

Government of India’s flagship initiative met with an enlarged definition of startup under the purview of Startup India, Stand up India. The Ministry of Commerce and Industry vide its notification G.S.R 501(E) dated May 23, 2017[1] broadened the definition of a startup for the purpose of government schemes taking into account long gestation period in establishing startups. Further, startups would no longer need a letter of recommendation from an incubator or an Industry Association for either recognition or for claiming tax benefits under the Startup India program. This move could be seen as a positive step to improve the ease of doing business in India, and promoting entrepreneurship in India to build the India story. The present notification is in supersession of the earlier notification dated February 17, 2016[2].

Bringing in the “New”

As per the present notification, a Private Limited Company organized under the Companies Act, 2013, a Partnership Firm registered under the Partnership Act, 1932, or a Limited Liability Partnership organized under the Limited Liability Partnership Act, 2008, can now be recognized as a Startup upto a period of seven years instead of the earlier stipulated five years from the date of incorporation or registration; for startups in Biotechnology sector the gestation period is extended to 10 years. Therefore, these startup companies would continue to enjoy their privileged status until the completion of their respective startup gestation period, and by fulfilling the below mentioned criteria during their gestation period -

a.       If it is working toward innovation, development or improvement of product or process or service or an accessible business model with great prospective of employment generation or wealth creation.

b.      Wherein, the turnover[3] for any financial year since incorporation should not exceed INR 25 crore (USD 3884702 approx.). Herein, the term turnover should be read in consonance with Section 2 (91) of the Companies Act, 2013, where it is defined as the aggregate value of the realization of amount made from the sale, supply, or distribution of goods, or on account of services rendered, or both, by the company during a financial year.

However, it must be noted that, no recognition will be granted to entity or entities formed from splitting or reconstruction of an entity already in existence.

Ease in Process

Online applications aim to improve upon the ease of governance and expediting the administration process. The present notification is in line with the previous 2016 notification and reiterates that the entity willing to be recognized as startup must apply online through mobile app/portal set up by Department of Industrial Policy and Promotion (hereinafter referred to as the ‘DIPP’). Application has to be submitted along with a Certificate of Incorporation/Registration with other relevant details as may be required. The entity has to provide the details about how it is working towards innovation, development, improvement of product or process or service or its scalability in terms of employment and wealth generation.

As per the notification, the startup recognition will cease once the entity’s turnover exceeds INR 25 crore (USD 3884702 approx.) or completes seven years (Ten years in case of Biotechnology startups) of incorporation, whichever is earlier.

Tax Boons

For the purpose of claiming tax benefits, the startup must be incorporated after April 01, 2016, but before April 01, 2019. It must be engaged toward development, innovation, improvement of products or process or service or must have high potential of employment generation or wealth creation. However, it may be noted that the definition of startup includes a partnership firm, registered under Section 59 of the Partnership Act, 1932, but tax benefits are only provided to Private Limited Companies and Limited Liability Partnerships as per the present notification.

Entity is also required to obtain a certificate of eligible business from Inter-Ministerial Board of Certification as constituted by DIPP.

However, no startup recognition for the purpose of tax benefit would be given if a startup is engaged in developing

1.      Products or services or processes which don’t have potential for commercialization.

2.      Undifferentiated products or services or processes

3.      Products or services or processes with no or limited incremental value for customers.

Revocation of Startup Status

As per the present notification, DIPP reserves the right to rescind the startup status of an entity without furnishing any prior notice to the party concerned. Therefore, if recognition is found to have been obtained without uploading the necessary documents, or on false premises, the same may result in revocation of the startup status of the entity if deemed fit by DIPP.

Therefore, as a relentless exertion to facilitate a comfortable startup ecosystem, the above changes can be seen as a robust effort and a welcome move by the government to guarantee ease of starting new businesses that would eventually encourage creation of jobs in the country.

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[1] http://startupindia.gov.in/notification.php#

[2]  http://dipp.nic.in/English/Investor/startupindia/Definition_Startup_GazetteNotification.pdf

[3] Section 2(91) of Companies Act 2013

India climbs six places to rank 60 in Global Innovation Index

Recently, on June 15, 2017, the World Intellectual Property Organization (hereinafter referred to as the ‘WIPO’) published the Global Innovation Index (hereinafter referred to as GII) for the year 2017, revolving around the theme: 'Innovation Feeding the World. The GII is an annual ranking of countries by their capacity for, and success in, ‘innovation’.  It is published by Cornell University, the Institut Européen d'Administration des Affaires (hereinafter referred to as ‘INSEAD’), in collaboration with WIPO and is based on both subjective and objective data derived from several sources, including the International Telecommunication Union, the World Bank and the World Economic Forum. The GII is commonly used by corporate and government officials to compare countries by their level of innovation in the field of science and technology, most importantly a country’s economic growth annually. Each year, the GII surveys some 130 economies using dozens of metrics, from patent filings to education spending providing decision makers a high-level look at the innovative activity which increasingly drives economic and social growth. For the last ten years, it has been observed that there is an innovative capacity gap between developed and developing nations due to lackluster growth rates for research and development activities at both the government and corporate levels.

On analyzing the annual growth rate of other nations, it can be inferred that Indian markets are on the rise and its growth rate is not stagnant. It has moved up six places to 60th among 130 nations, emerging as the top-ranked economy in Central and South Asia. Previously, in 2016 it was ranked in 66. This year’s report demonstrated India to be a consistent outperformer on innovation relative to its GDP per capita. It made important strides in innovation input and output performance, which highlighted the continual improvement of India in terms of investment, tertiary education, quality of its publications and universities, its ICT services, exports and innovation clusters. According to the Director General of Confederation of Indian Industries (hereinafter referred to as the ‘CII’) Chandrajit Banerjee, “Public policy plays a pivotal role in creating an enabling environment conducive to innovation, and since the last two years, we have seen important activities in India like the formation of India's high-level task force on innovation and consultative exercises on both innovation policy and better innovation metrics.”[1]

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[1] http://www.business-standard.com/article/current-affairs/india-moves-up-six-places-to-60th-on-global-innovation-index-report-117061500680_1.html

Bitten by the Yoga bug, S.S. Rana & Co., turns it’s Conference Room into a Yoga Studio

June 21, 2017 marks the third International Yoga Day, two years after Indian Prime Minister Narendra Modi successfully convinced the UN to declare an International Day for Yoga. The declaration was made on December 10, 2014, and India celebrated the inaugural Yoga day with full fervor on June 21, 2015, as covered in Vol. VII, Issue No. 25 of our e-newsletter “IP ©onnect”, dated June 22, 2015, available here.

The celebrations did not simmer down for the third edition of the Yoga day, as over 50,000 people performed yoga braving early morning drizzles, led by PM Modi during the event held at Ramabai Ambedkar Maidan in the city of Lucknow, Uttar Pradesh.

The logo of International Day of Yoga is the folding of both hands. It symbolizes ‘Yoga’ that is the union, which reflects the union of individual consciousness with that of universal consciousness, a perfect harmony between mind and body, man and nature – a holistic approach to health and well-being.

Bitten by the Yoga bug, we turned our office Conference room into a makeshift Yoga Studio. From short talks on yoga, work-life balance, a session on relaxation techniques and experiential session on meditation, we organized a series of events, and the employees also pledged to make yoga an integral part of their daily lives. 

India: Bombay High Court holds that Feranta not deceptively similar to Intas Ferintas

In a recent case filed by Ajanta Pharma Ltd (hereinafter referred to as the “Plaintiff”) before the Bombay High Court (hereinafter referred to as the ‘Court’) seeking an injunction restraining Theon Pharmaceuticals (hereinafter referred to as ‘Defendant No. 1’) and Intas Pharmaceuticals (hereinafter referred to as ‘Defendant No. 2’) (collectively referred to as the Defendants) from infringing and passing off its mark “FERANTA”, the Hon’ble Court vide order dated May 5, 2017 held that there was no prima facie case made out by the Plaintiff, and dismissed the present notice of motion filed by it against the Defendants.

 Brief Facts: 

The Plaintiff obtained for registration of the mark FERANTA under Application no. 1652066, on February11, 2008 in class 05 for pharmaceutical, medicinal and veterinary preparations. The Plaintiff has used the mark since 2013 for L-Methyfolate Calcium, Pyridoxal 5'- Phosphate, Methylcobalamin, Ferrous Ascorbate and Zinc Sulphate pharmaceutical tablets. The Plaintiff claims that it has had considerable sales of INR 88.21 lakhs (USD 136805 approx.) in 2015-16, and has run up promotional costs as well. The Plaintiff claims that in or around July, 2016, it discovered the Defendant No. 2’s Ferrous Ascorbate and L-Methyl Folate tablet under the FERINTA mark (now abandoned), with a suffix 'XT', which was being sold as a dietary supplement. It further discovered that the Defendant No. 2 had applied for registration of its mark under application number 2969381, in the same class as that of the Plaintiff. The Registrar objected to the application, citing the Plaintiff’s prior registration of FERANTA as a conflicting mark. On that objection, the Defendant No. 2 made another application on April 15, 2016 under no. 3235362 for the mark FERINTA XT. On August 11, 2016, the Hon’ble Court granted ex-parte ad interim injunction in favour of the Plaintiff directing the Defendant No. 2 to cease usage of FERINTA. On September 1, 2016, the Defendant No. 2 agreed to cease usage of FERINTA, and would instead use the mark INTAS’ FERINTAS, with INTAS’ set above the word FERINTAS, with the letter FER in black, and the rest in a rust red color and FERINTAS set in an oval lozenge device.

Defense taken by the Defendants: 

·         That the Plaintiff has itself copied the trade mark from another party, and therefore cannot institute action against the Defendant No. 2.

·         That the Plaintiff’s products are sold as pharmaceutical drugs, whereas the Defendant’s products are sold as dietary supplements.

·         There is honesty in adoption of the trade mark, with FER- being derived from FERrous, and INTAS from the Company name.

·         That the present case does not fall under the ambit of Section 29 (1) but rather Section 29 (2) of the Trade Marks Act, 1999. The goods manufactured by the Plaintiff and the Defendant No. 2 cannot be conflated as Class 05 has a wide sweep, as if a party has only manufactured pharmaceutical drugs and not dietary supplements, there cannot be any likelihood of confusion. In other words, for a case falling under Section 29 (2) of the Trade Marks Act, 1999, mere similarity of marks is insufficient, and must be accompanied by a similarity or identity of goods; and even that will not completely fulfil the requirements of Section 29 (2), for a likelihood of confusion must be shown. 

Plaintiff’s Counter-Submissions: 

·         That the Plaintiff has not copied anyone’s mark, and the mark FERANTA lapsed in 1989 and was filed on a proposed to be used basis.

·         That the two products have precisely the same ingredients and serve exactly the same purpose. According to the Nice classification, pharmaceuticals include dietary and meal supplements and dietetic foods adapted for medicinal use (but, importantly, does not include meal supplements and dietetic foods not for medicinal use).

·         The contents or ingredients are the same, as are the trade and marketing channels and the consumer base. Any difference is formulation is trivial, as both products are vended to treat anemia.

·         The Plaintiff states that a party cannot slither around in Class 05 by saying its mark, though in that class, is for a different sub-class or sub-species. The test in law speaks to the existence of rival marks in a class, not in a sub-classification. A classification or sub-classification in any case is never as important as the manner of use. What the law prevents is a rival from adopting a deceptively similar mark.

·         That honesty in adoption is irrelevant, and in any case, there is no honesty on the part of the Defendant for adoption of the said mark, as the Defendant was well aware of the Plaintiff’s prior registration and its mark inter alia from the Registrar's citing of the Plaintiff’s mark as a conflicting mark.

·         The Plaintiff submits that the deconstruction of the mark into separate names and explaining how the trade mark is formed is wholly irrelevant to the present case. 

Court’s Observations: 

·         The Court observes that the two marks have to be seen as a whole and not separately. Therefore, the Plaintiff’s submission that the Defendant’s mark should be considered without INTAS is dismissed. Furthermore, the Court held that looking at the two marks as a whole, there is no doubt that there is, in the words of the Supreme Court in JR Kapoor v Micronix India [1994 Supp (3) SCC 215] not the remotest chance of buyers and users being misguided or confused.

·         The Hon’ble Court observed that one must guard as much against an approach that is overbroad, and sweeps in all manner of goods easily distinguished, and one that is much too narrow. Given the similarity of marks, the next step would then be to test similarity of goods. The Defendant No. 2’s product is not adapted for medical use. The Hon’ble Court further observed that the NICE classification (2016 version, 10th edition), in its entry for Class 5, says the class does not include meal replacements, dietetic food and beverages not for medical or veterinary use. If the Defendant No. 2’s product is such a dietetic food, then that may be another point of distinction. The Hon’ble Court held that the two marks were sufficiently distinguishable.

·         The Hon’ble Court observed that the Defendant’s products did not harm the public in general and did not warrant an injunction to preserve the public interest.

·         The Hon’ble Court also observed that there is a well-established sequence in which a claim in infringement and passing off (or either) should be examined. Though the causes of action are distinct, some of their tests overlap common to both is this sequencing:

o   Are the marks identical?

o   If not, are they similar;

o   What is the nature and degree of similarity;

o   What goods or services are they being used on or for?

o   Are those goods or services identical, or similar?

The Hon’ble Court stated that answers to these questions, in various permutations, yield a result. However, the Hon’ble Court stated that it is possible to invert this paradigm, and suggest that because the goods are either the same or similar, therefore one must work backwards to conclude that the marks must be similar, or held to be similar, and therefore, infringement and passing off must both be presumed. Identity or similarity of marks must be the first test, not the assumption, and we proceed to the goods or services from there, not the other way around.

Held:

“It is not possible to hold that a prima facie case is made out. The Motion fails. It is dismissed. There will be no order as to costs.”

India: DLF granted injunction over infringement of the mark ‘EMPORIO’

Hon’ble Delhi High Court, in the case of DLF Limited vs. Rediff.Com India Ltd. & Ors[1], granted an ad interim injunction in favour of DLF Limited (hereinafter referred to as the ‘Plaintiff’), restraining Stanley Lifestyles Ltd. (hereinafter referred to as ‘Defendants’) from using the mark Global Living Emporio in respect of similar services.

Hon'ble Justice Rajiv Sahai Endlaw, on May 30, 2017, has allowed a temporary relief to Gurgaon based real estate powerhouse DLF limited for infringement of their mark EMPORIO.  

Background

The Plaintiff is a real estate giant based out of Gurgaon whereas Defendants no. 2 to 5 own and operate a shopping mall in Banglalore under the name of Global Living Emporio. Defendant no. 1, Rediff.com India Ltd. is the registar on which the domain of the Defendants no. 2 to 5 namely  <globallivingemporio.com> is hosted.

The Plaintiff has levelled allegations against the Defendants that they are infringing the trade mark EMPORIO of the Plaintiff by adopting the mark Global Living Emporio in respect to similar services as offered by the Defendants themselves. The Plaintiffs in their complainant asserted that the Defendants, by appropriating the mark EMPORIO, are passing off their goods and services as that of the Plaintiff’s when it is not so.

Held

Hon’be Justice Endlaw, in a very consice order, has held that on perusal of the documents filed and the pleadings made out in the court, the Plaintiffs have made out a prima facie case that they are the bonafide user and adopter of the mark EMPORIO since 2004 and that the Defendants use of the mark EMPORIO as a prominent part of the trade name Global Living Emporio with effect from March, 2017, is considerably subsequent. Delving into the point of territorial aspect of the operations of the both of the parties, Justice Endlaw, avered that even though the Shopping mall of the Plaintiff is at Delhi and that of the Defendant is at Banglalore, the Defendants no. 2 to 5 have registered and are carrying out business through their website www.globallivingemporio.com.

The aforesaid website is also linked to another website of the Defendants www.lovestanley.com. Relying on the Plaintiff’s registration of its website www.dlfemporio.com in 2008, which is much prior to the Defendants registration of their website www.globallivingemporio.com, Justice Endlaw construed that subsequent use by the Defendants No.2 to 5 of a website with the word ‘EMPORIO’ in the domain name is certainly capable of the customers of the Plaintiff being diverted to the Defendants No.2 to 5. Elaborating on the issue of territorial jurisdiction, Justice Endlaw opined that although the shopping mall of the Defendants is located in Banglore, the Hon’ble Delhi Court has territorial jurisdiction.

Therefore, while concluding that the Plaintiff has made out a case of ex parte injunction, Justice Endlaw restrained the defendants from operating the website www.globallivingemporio.com or any other website/domain name with the word ‘EMPORIO’ as part thereof, alone or in conjunction with any other word/s and for restraining the defendants from launching any other Mall or luxury goods business in the name of EMPORIO. He further mandated Defendant no. 1 to block the domain <globallivingemporio.com>.

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[1] CS(COMM) 399/2017

S.S. Rana & Co., celebrates World Environment Day

S.S. Rana & Co.’s Green Policy Committee have always been committed to adopt policies that are environment friendly so at to protect and conserve our vulnerable natural resources. We always endeavor to implement eco-friendly measures in our office, as well as surroundings so as to bring down unnecessary wastage and minimize the risks such as ozone depletion, greenhouse effect, global climate changes and/or global warming.

World Environment Day is a day for everyone, everywhere. Since it began in 1972, global citizens have organized many thousands of events, from neighborhood clean-ups, to action against wildlife crime, to replanting forests. "Connecting People to Nature", the theme for World Environment Day 2017, implored us to get outdoors and into nature, to appreciate its beauty and its importance, and to take forward the call to protect the Earth that we share. This year’s theme invited us to think about how we are part of nature and how intimately we depend on it. It challenged us to find fun and exciting ways to experience and cherish this vital relationship.

Taking inspiration from this year’s theme, we celebrated World Environment Day, firstly by wearing Green (the official color of the attire for the Day!!) and we took some time out of our hectic schedule and planted saplings on the stairway and corridors of the office. The evening snack distributed to all employees also comprised of fresh fruits.

India: Bombay High Court holds that each component of design need not be tested for originality and novelty

In this case, Cello House Hold Products (hereinafter referred to as the ‘Plaintiffs’) filed a suit against Modware India (hereinafter referred to as the ‘Defendants’) in the Bombay High Court seeking an injunction against the Defendants on the grounds of passing off and more importantly, infringement of Design.

The Plaintiffs created a plastic bottle named PURO in May 2016. It got the bottle registered with the Indian Design Office on August 23, 2016, the corresponding registration number being 283345.

The Plaintiffs marketed the bottle in a two-toned color and the packaging it used had words like BPA Free, Insulated Water Bottle, Break Free, Leak Proof etc.

The Defendants launched a similar two-toned bottle in January 2017, which it called KUDOZ in the market with similar type of packaging containing the same words.

The Plaintiffs came to know about the Defendants bottle KUDOZ in the third week of January 2017 and filed a suit for infringement against them.

The Defendants claimed that the design used by Cello for their bottle PURO was a mere way of cobbling together several pre-existing known designs, or mere mosaicking.

The suit went to trial on March 30, 2017. 

Plaintiff’s submissions

The Plaintiffs submitted that their bottle PURO was designed in compliance with the Indian Designs Act, 2000, and has a unique shape, configuration and surface pattern.

 

They further submitted that their bottle PURO comes with certain features described below:

•  The configuration of the bottle is such that the body of the bottle is divided into two parts.
•  It has an aesthetically attractive surface pattern with an oval/egg shaped curve.
• It has a flip flop cap which is also divided into parts.
• The main body of the PURO bottle and also its cap contains a unique color combination of two colors. 

They further submitted that the packaging used by them was also unique and had words like BPA Free, Insulated Water Bottle, Break Free, Leak Proof etc. printed on them.

The Plaintiffs asserted that they widely advertised their bottle PURO and had a sale in excess of 7 crore and claimed that their product was widely popular and successful.

The Plaintiffs submitted that the Defendants had copied the same design of PURO bottle and had also used the same packaging with same words printed on the packaging in the market. They further submitted that the Defendants used the same tow-tone colored bottle.

Defendant’s submission

The Defendants submitted in their defense that the design used by the Plaintiffs for their bottle PURO is already known in prior art and prior publication

Further, they submitted that the PURO bottle do not have any novelty nor originality and is only a mere cobbling together several pre-existing known designs, or mere mosaicking.

They further averred that no bottle is novel or original and it is just a bottle and so Cello can’t claim its bottle as novel and original. It further submitted that the design it used for KUDOZ was derived from its various bottles which it had launched earlier to KUDOZ. It also submitted that the shape of PURO bottle is the natural shape of a bottle.

The Defendants claimed that the Plaintiffs have designed their bottle based on the previous design of the bottles manufactured by the Defendants themselves and concluded their arguments by submitting that the Bombay High Court did not have territorial jurisdiction to entertain the suit.

The Court’s decision

The Court observed that the response submitted by the Defendants that a bottle is a bottle cannot be accepted as it is not possible to accept that no vertical cylindrical fluid container can be novel or original.

The Court rejected Modware’s defense of mosaicking and stated that it is not a requirement of the law in infringement or passing off cases in relation to a design that every single aspect must be entirely newly concocted and unknown to the history of mankind.

The Court observed that this is an instance of design infringement by Modware as Modware's product was confusingly and deceptively similar to that of Cello's registered design.

The Court further observed that there was passing off done by Modware because it deceived consumers in believing that the bottle originated from them.

Thereafter, the Court observed that Cello has satisfied all three probanda to induce passing off action namely, (i) reputation and goodwill in the goods; (ii) misrepresentation by the Defendants; and (iii) damages.

The Court concluded that Cello had a good reputation in the market as they were an old company and also the sales turnout of PURO bottle was very high and cello had even advertised their product and the product had achieved a great deal of commercial success.

The Court also observed that Modware was attempting to deceive consumers into believing that its products came from the house of Cello. In other words, it was an attempt calculated to deceive and there was a misrepresentation by Modware that Cello’s product was their own and hence the action of passing off against Modware.

Lastly, the Court rejected the submission of Modware that the Bombay High Court did not have territorial jurisdiction to entertain the suit by pointing out that there was an address printed on its packaging which contained an address of correspondence based in Bombay and hence the Court had the right of territorial jurisdiction. 

S.S. Rana & Co, is now Great Place to Work Certified

Dear Clients & Associates,

It gives us immense pleasure to announce that S.S. Rana & Co., has won the Great Places to Work Certification Program and we are overwhelmed to inform you that our Firm is now Great Place to Work-Certified™!!!

We take this opportunity to thank each and every one of you who trusted us with our services, without which we would have never achieved this milestone.

Every year, more than 8000 organizations from over 50 countries partner with Great Place to Work Institute for assessment, benchmarking and planning actions to strengthen their workplace culture. Great Place to Work Certification Program is the first step for an organization in its journey to build a High-Trust, High-Performance Culture and our organization has successfully accomplished this breakthrough. 

It has been an honor to assist each and every one of you in our journey towards building and sustaining a High-Trust, High-Performance Culture.

We hope that we make great strides in surpassing our own culture assessment results and keep raising the bar for ourselves in the years to come. 

S.S. Rana & Co., hosts a Yoga Session during INTA’s 139th Annual Meet

S.S. Rana & Co., kick-started INTA’s 139^th Annual Meeting in Barcelona by hosting a Yoga Session in association with Jiva Mukti Yoga, Barcelona.

We thank all the attendees for choosing our session to begin their yogic journey of health, serenity and fitness. It was our mission in association with Jiva Mukti Yoga, to provide you with the highest quality yoga instruction from experienced and well known trainers. The beautiful studio with soothing light glowing through its windows coupled with the peaceful energy of our friendly trainers inspired relaxation and the unraveling of worries, and offered a complete schedule that strengthened the body, mind and spirit.

On behalf of the entire team at S.S. Rana & Co., we would like to take this opportunity to sincerely thank all the attendees for supporting us in this initiative and participating wholeheartedly. We home to continue this ession next year in Seattle.