Begin typing your search above and press return to search.
Columns

The Designs Act, Section 22(4) & Interlocutory Powers Question

Eashan Ghosh
14 July 2021 3:30 AM GMT
The Designs Act, Section 22(4) & Interlocutory Powers Question
x

Section 22(4) of the Designs Act, 2000 is a peculiar provision. It prescribes a compulsory transfer to the High Court for any design infringement claim instituted before a court of first instance. The transfer, according to the statute, must occur if the Defendant, as part of its infringement defence, avails of grounds that challenge the validity of the Claimant's...

Section 22(4) of the Designs Act, 2000 is a peculiar provision.

It prescribes a compulsory transfer to the High Court for any design infringement claim instituted before a court of first instance. The transfer, according to the statute, must occur if the Defendant, as part of its infringement defence, avails of grounds that challenge the validity of the Claimant's registration. These grounds, listed in Section 19 of the Designs Act, are usually invoked in proceedings before the Controller of Designs seeking to cancel a design registration. In an infringement context, however, raise the same grounds against the Claimant's registration, and the suit must be transferred to the High Court for adjudication.

The operative part of Section 22(4) runs:

"…where any ground on which the registration of a design may be cancelled under Section 19 has been availed of as a ground of defence, the suit shall be transferred by the court, in which the suit is pending, to the High Court for decision."

A typical case would run thus: A design infringement suit is initiated before a court of first instance. The Defendant, as part of its defence, may rely on Section 19's substantive grounds that assail the Claimant's registration. Once the Defendant raises these grounds, the court of first instance, where it is not a High Court, is required by Section 22(4) to transfer the suit to the High Court for decision. Once the Section 19 grounds are invoked, the plain language of the statute itself suggests that the court of first instance needs nothing further to initiate the transfer. Even so, a request for such transfer may be made by the parties, usually in the form of an interlocutory motion.[1]

A Unique Provision with Duelling Theories

Section 22(4) is quite unique in the context of Indian intellectual property law.

Its two closest stylistic parallels are strangely uncompelling ones. One place to look for a parallel would be for a provision that automatically suspends a legal proceeding before one forum and transfers it to another. There is such a provision under the Trade Marks Act, for instance.[2] However, its value is now severely diluted since, in a large chunk of cases going forward, the transferring forum and the receiving forum will be the same.[3] Another place to look for a parallel would be India's fairly well-rounded recent history in relation to transfers in intellectual property cases.[4] But this, too, is of little assistance since the transfer under Section 22(4) is statutory.

Section 22(4) is founded on an artificial suspension of authority of the court of first instance. It requires, upon its invocation, for the court of first instance to transfer the suit to a higher court.

This is, in essence, an ouster of jurisdiction. After trading duelling theories on what this ouster of jurisdiction is based on, Indian design courts have, in the main,[5] accepted that the transferring court no longer has jurisdiction over the claim once Section 22(4) has been invoked.[6]

Resting Section 22(4) transfers on an absence of jurisdiction has a fascinating upshot. Since the Act is silent on why jurisdiction is lost, two views can be surmised as to how the absence of jurisdiction occurs.

According to one view, the act of pressing grounds of defence under Section 19 in an infringement suit has the effect of instantly terminating the jurisdiction of the court of first instance. Under the other view, the Defendant pleading Section grounds is the first stage in initiating a hollowing out of the jurisdiction of the court of first instance.

Interlocutory Powers

The direction in which this conflict is resolved has a considerable impact on interlocutory powers. Under the instant termination theory, the absence of jurisdiction of the court of first instance must per force extend to their interlocutory powers as well.[7] Under the hollowing out theory, however, there may still be room for the court of first instance to exercise some interlocutory powers before the Section 22(4) transfer is completed.

It is a popular legal cliché to interpret a split in precedent on both sides of a proposition as a sign of lively debate. This, however, is an instance where the split in precedent perhaps betrays a lack of deliberation by Indian design courts.[8] The sequence of actions envisioned by sub-sections (3) and (4) to Section 22 make clear that the preferable view is one where jurisdiction in the first instance is ceded immediately upon the Section 19 grounds of defence being invoked by the Defendant.

From this point forward, "the court [of first instance] shall have no jurisdiction to proceed further, and shall have no option but to transfer the case to the High Court."[9] This transfer is, as the Supreme Court phrased it last December, "a ministerial act" since "the Defendant has a right to seek cancellation of the design which necessarily mandates the transfer."[10]

Even so, this leaves open two questions.

First, when can a Section 22(4) transfer said to have been invoked as a matter of law? Second, what interlocutory powers does the court of first instance have in its locker prior to the Defendant raising grounds of defence under Section 19?

Despite some previous controversy,[11] the answer to the first question is straightforward. The condition for a Section 22(4) transfer must be invoked by the Defendant via a pleading. The pleading itself need not be the formal written statement filed against the infringement claim; it can be any pleading which clearly and specifically invokes the grounds of challenge,[12] such as a reply to an interlocutory application.[13]

The second question is harder to address with precision. It is best answered with an 'at least' list. The range of interlocutory tools available to transferring courts of first instance at least covers the powers to grant and vacate interlocutory injunctions,[14] order costs at the interlocutory stage,[15] and allow withdrawal of proceedings.[16]

Interlocutory injunction powers are, unsurprisingly, the focus of attention here.[17] Considerable judicial effort has also been expended in figuring out how receiving High Courts should handle Section 22(4) cases with pre-transfer interlocutory injunctions. Arriving at uniform treatment of such cases is a sketchy exercise owing to their limited numbers. Nevertheless, it is possible to discern the outline of a consensus around the position that High Courts may, in the process of receiving Section 22(4) transfers, extend pre-transfer interlocutory injunctions.[18]

Post-Transfer Justification for Limiting Interlocutory Powers

There is another point of interest under the termination of jurisdiction theory.

It posits that the abruptness of terminating interlocutory powers of the court of first instance is made complete by what happens after the Section 22(4) transfer.

It stands to reason that, following a Section 22(4) transfer, the High Court receiving the infringement suit can (and must) consider the viability of the Section 19 grounds. Indeed, this is one of the key drivers of the transfer in the first place. A line of Indian cases specifically recognise that High Courts must examine the viability of these Section 19 grounds at the interlocutory stage.[19]

As is standard in interlocutory proceedings, the examination of the merits of the defence will be a cursory one. Equally, after this examination, the High Court ruling at the interlocutory stage will be dictated by the strength of the challenge canvassed by the Defendant to the Claimant's design registration.[20] (It is also worth noting that the strength of the Defendant's challenge here is far from a substantively empty criterion.[21])

Either way, it is incumbent on the transferee High Court to consider the viability of the Section 19 grounds. This must be so, since the alternative would invite an absurdity where Defendants can use Section 19 grounds to defend themselves against a permanent injunction but not an interim injunction.[22] It is worth clarifying, however, that this examination of the Section 19 grounds at the interlocutory stage does not translate to a direction to cancel of the Claimant's design. Such an adjudication can only be a post-trial final adjudication.[23]

Therefore, the position that emerges, somewhat curiously, is that the full effect of Section 22(3) can only be made good after the operation of Section 22(4).

High Courts Having No Commercial Division Competent To Consider Cancellation Of Design Under Section 22(4) Of Designs Act : Supreme Court

Quality of Adjudication Concerns

Section 22(4) transfers evidently apply to a narrow slice of design infringement cases. The number of instances where interlocutory powers are at issue within this set of cases, of course, is narrower still. This very straitened scope can, however, disguise the seriousness with which its operation can affect the cases it does apply to.

Since infringement claims filed directly before High Courts are outside its purview, the statutory transfer under Section 22(4) specifically applies to two sub-categories of cases. The first are low value infringement proceedings before District Courts in jurisdictions where high value original claims are instituted directly before High Courts. The second are all infringement claims instituted in jurisdictions where the High Court does not have original jurisdiction over civil-commercial claims. These two categories of claims are, therefore, until the invocation of a Section 19 defence by the Defendant, locked by the statute into an odd stasis. They must, by hypothesis, receive a quality of interlocutory adjudication consistent with courts lower in the judicial hierarchy compared with direct-to-High Court design infringement claims.

The isolation of these sub-categories of cases is troubling for two reasons.

First, the distinction between them and direct-to-High Court infringement claims is an insensible one. There is nothing inherent to these cases in terms of the style, quality or subject matter of the claim, the conduct or profile of litigants, or other characteristics that makes them better suited to a truncated range of interlocutory orders by lower courts. Second, the distinction is random, in the sense that it does not block access to High Court-standard interlocutory adjudication on the basis of the underlying right(s) under litigation, remedies sought, claim value, or any other accepted metric. It is simply dictated by the geographical lottery of where the cause of action for the infringement claim happens to arise.

It is hard to imagine that this kind of discrepancy has not had qualitative consequences on design infringement adjudication. Equally, options to resolve it, outside of a statutory reboot, are limited. One judicial solution could be to standardise pre-transfer interlocutory adjudication. Even this, though, is not without its drawbacks.[24] As a result, judicial effort must, for the moment, be directed towards ensuring quality adjudication from case to case.  

Conclusion

To summarise, then, the law on interlocutory powers with courts of first instance in design infringement cases is undoubtedly complicated by Section 22(4). The statutory transfer, a stylistically unique one in Indian intellectual property law, forces a delicate balance upon courts receiving infringement claims. They must deploy their wide range of interlocutory powers to do justice to the claims before them but must step aside immediately upon the invocation of the Section 22(4) transfer. The justification for this approach is found both within and outside the boundaries of the provision. However, any rendition of interlocutory powers exercised in the crosshairs of Section 22(4) will be susceptible to unequal quality of adjudication between different types of infringement claims. This is a structural difficulty born from the framework of the Designs Act itself.  

All in all, these principles are in keeping with the zeitgeist of Section 22(4): peculiar at first glance but a lightning rod for an intriguing legal discussion when seen in context.

(Eashan Ghosh is a practitioner and consultant specializing in intellectual property law. He is the author of Imperfect Recollections: The Indian Supreme Court on Trade Mark Law, and covers Indian intellectual property law developments at: https://medium.com/@eashanghosh.)


[1] See Daniel v. Safiullah 2004 (29) PTC 62 (Mad), and Deepthi Trading v. Cookwell Domestic Appliances 2002 (2) KLJ 46.

[2] Section 124 of the Trade Marks Act, 1999.

[3] This change has been precipitated by Sections 6 and 8 of the April 2021 Tribunals Reforms (Rationalization and Conditions of Service) Ordinance, 2021.

[4] See, for instance, Pizza Hut Inc v. Pizza Hut India 1997 (17) PTC 71 (SC); Rollatainers v. Standipack 1997 (17) PTC 1 (SC); SUA Explosives v. S Kumars 2002 (25) PTC 384 (SC); Troikaa v. Wockhardt 2002 (25) PTC 415 (SC); SAS Pharmaceuticals v. Syncom Healthcare 2005 (31) PTC 134 (SC), and DAV Boys Sr Sec School v. DAV College Managing Committee 2010 (43) PTC 625 (SC).

[5] See, per contra, Kadambukattil Exports v. Nilkamal 2013 (2) KLJ 598.

[6] See Astral Polytechnik v. Ashirvad Pipes 2009 (3) KarLJ 623, and Gupta & Co v. Action Construction Equipments 2016 (6) ADJ 102.

[7] See Escorts Construction v. Gautam Engineering 2009 (40) PTC 249 (J&K), and Action Construction, above.

[8] See, for instance, the Rajasthan High Court in Tirupati Sprinklers v. Flexituff International 2017 (69) PTC 414 (Raj), calling out the Kerala High Court ruling in Kadambukattil Exports, above, by stating that it "cannot be accepted as correct."

[9] See Action Construction, above.

[10] SD Containers v. Mold Tek Packaging 2021 (85) PTC 1 (SC).

[11] See Kadambukattil Exports, above.

[12] See Vidyaa Ayurveda v. Vaishali Industries OP (C) No. 2295/2014 (O) (Kerala High Court, 10 February 2017).

[13] See Action Construction, above.

[14] See Bhiwadi Polymers v. Gupta 2019 (77) PTC 290 (Del).

[15] See Crocs v. Liberty Shoes 2018 (73) PTC 425 (Del).

[16] The power of the court of first instance to permit withdrawal of infringement suits is exceptional in the sense that it may be exercised even after the request for a Section 22(4) transfer is placed. See Esdee Industries v. Esbee Electrotech WP No. 1217/2020 (Bombay High Court, 14 December 2020).

[17] See Wim Plast v. Symphony 2016 (67) PTC 244 (Guj). A good contrast here is with Section 24A(2) of the Registered Designs Act, 1949 and Section 229(2) of the CDPA, 1988 in the United Kingdom, both of which cover the power of the receiving court to grant interim injunctions.

[18] A good illustration is provided by Troikaa v. Pro Laboratories MIPR 2009 (1) 168.

[19] This position has been advanced enthusiastically by a series of Madras High Court cases, including Metco Polymers v. Madhu Inflatables (2005) 4 MLJ 294 (DB); Hi-Tech Carbons v. M&K Technologies (2008) 3 MLJ 604; Eagle Flask Industries v. Bon Jour International 2011 (48) PTC 327 (Mad), and Maya Appliances v. Butterfly Gandhimathi Appliances 2017 (70) PTC 31 (Mad).

[20] See Rotela Auto v. Singh 2002 (24) PTC 449 (Del).

[21] It has been held, for instance, that "it is not sufficient, at the interlocutory stage, to merely make out an arguable case [for cancellation]." See Frito-Lay v. Balaji Wafers AIR 2020 Bom 304, relying on Lupin v. Johnson and Johnson AIR 2015 Bom 50.

[22] See Metco Polymers, above.

[23] See Marico v. Raj Oil Mills 2008 (37) PTC 109 (Bom)(DB).

[24] See Esdee Industries, above.


Next Story