‘Croc-a-Copy Tale’: Crocs Inc. V. Aqualite India Ltd & Anr.

Lucy Rana, Isheta Srivastava | April 2019

Intellectual Property Rights gives protection to an intellectual creator certain rights to protect and exploit its intellectual goods for a limited period of time. To achieve this, the rights are divided into different types to facilitate proper protection for different kinds of intellectual creations. Sometimes the IP rights overlap amongst each other, however it is important to keep in mind that the aim and objective behind each IP legislation is distinct. Recently, one such issue, of overlap between Design Rights and Trademark, arose before the Delhi High Court (hereinafter referred to as ‘the Court’) in the case of Crocs Inc v. Aqualite India Limited & Anr. The Court opined that Design cannot constitute trademark. It made it clear that once a person registers for an IP right, which in this case was Design right, he/she can only get benefits which are granted by the statute. It held that the only inference from a harmonious reading of the law relating to trademark and the law relating to designs is, that what is registered as a design cannot be a trademark, not only during the period of registration as a design but even thereafter.

FACTS

The suit before the Court was initiated by Crocs Inc USA (hereinafter referred to as ‘the Plaintiff’) for restraining the Defendants (Aqualite India Limited, Action Shoes Pvt Ltd, Bioworld Merchandising India Limited, Liberty Shoes Ltd, Bata India Ltd & Relaxo Footwear Ltd) from passing off its/their footwear as that of the plaintiff under the trademark ‘CROCS’, by adopting and copying the shape trademark/trade dress of the Plaintiff.
It was contended by the Defendants that the suits against them were not maintainable in the light of the dicta of the Five Judge Bench of this Court in Carlsberg Breweries v. Som Distilleries1.
The very maintainability of the suits was for adjudication before the Court. The Court stated that only if the suits were found to be maintainable, the question of entitlement of the Plaintiff to interim relief would be considered.

PLAINTIFF’S CONTENTION

It informed that composite suits were filed against some of the Defendants for infringement of design as well as for passing off. However, relying on Mohan Lal v. Sona Paint & Hardwares2 the composite suits were continued only for relief of infringement of design.
It was further informed that suits against some of the Defendants, from inception, were separately filed on the ground of infringement of design and on the ground of passing off. However, in these suits interim injunction was denied on the ground of infringement of design.
Then appeals to the Division Bench was preferred against the denial of interim injunction on the ground of infringement of design. These appeals were also dismissed on January 24, 2019.
It was argued that notwithstanding the denial of interim injunction on the ground of infringement of design, it was entitled to interim injunction in these suits on the ground of passing off.
On the question of denial of interim injunction, it was submitted that the sole reason was of ‘prior publication of the design’. It was also contended that the said prior publication was found by the Plaintiff itself and thus the said prima facie finding does not come in the way of this Bench for granting interim injunction in these suits on the ground of passing off.
On the aspect of maintainability, it contended that:
The definition of ‘mark’ in Section 2(m) of the Trademarks Act included shape of goods.
Section 2(d) of the Designs Act defined shape only as the features of shape etc. Which in the finished article applied to and are judged solely by the eye but did not include any trademark.
The bar to a design being a trademark was contained in the Designs Act and not in the Trademarks Act.
The Trademarks Act did not say that if the shape was registered as a design, it cannot be a trademark. Thus, the cancellation can be only of a design, if it is a trademark and not of the trademark.
In the case of Mohan Lal v. Sona Paint & Hardwares the observation was only about registration and not about passing off, and thus Carlsberg Breweries v. Som Distilleries cannot be interpreted as holding that there can be no passing off action in relation to a shape trademark.
There was no property right in any trademark and no property right was conferred even by registration of a trademark.
Merely because each of the Defendants’, instead of the brand name of the Plaintiff were putting their own brand name, did not defeat the action for passing off.

DEFENDANT’S CONTENTIONS

It contended, that as per Carlsberg Breweries v. Som Distilleries, a passing off action has been held to be maintainable with respect to elements of trade dress and overall get up, other than registered design and not with respect to registered design.
It was argued that the registered design of the Plaintiff takes within its ambit, everything, leaving no larger trade dress get up. It was further argued that no passing off action lies when passing off was claimed of elements of the design as a trademark.
It was contended that the there was an admission by the Plaintiff, that it used the registered design as a shape/trademark/trade dress. It was argued that no additional features qualifying as trade dress, which were not part of the registered design, have been pleaded or pointed out.
It was contended that if what was registered as a design was also given protection as a trademark, it would not only run counter to the rights for a limited period in a design but through a backdoor permit rights as a trademark which were not registrable under the Designs Act.
It argued that unless the relief of passing off in relation to design was restricted, as has been held in Carlsberg Breweries Vs. Som Distilleries3, it will result in ‘evergreening of design’. Further, it also argued that if a shape of good/product was registered as a trademark, then it cannot be registered as a design and to hold, that if it is vice-versa, an action for passing of would be maintainable, would amount to conferring rights better than as may be available by registration.

COURT’S ANALYSIS

It was held by the Court that a registered design confers on the registrant, only the right to restrain another from infringing the design and not to, also claiming the registered design as its trademark/trade dress, restrain another from passing off its goods as that of the registrant, by copying the registered design. The Court reasoned that: • Perusal of the statement of objects and reasons for enactment of the Designs Act, 2000 showed the same to have been enacted.

As per the definition of design in Section 2(d) the Designs Act, if the feature of shape, configuration, pattern, ornament or composition of lines or colors applied to any article were being used as a trademark, then it cannot be registered as a design.
The consistent principle of construction of statutes was that where any statute is re-enacted with or without modification, then reference in any other statute to any provision of the repealed statute, unless a different intention appears, has to be construed as a reference to the provision so re-enacted.
If it were to be held that while one category of trademarks cannot be registered as a design, another category of trademarks can be so registered and enjoy protection, both as a trademark and as a design, the same would amount to, without any reason, discriminating between two kinds of trademark.
The intention of the Legislature was clear from the prohibition contained in the Designs Act, and to accept the contention of the Plaintiff would defeat the legislative intent and the legislative intent in enactment of the statute should be respected.
Once the legislative intent was that a trademark cannot be a design, the features of shape, configuration, pattern, ornament or composition of lines or colors applied to any article, even if used as a trademark, cease to be a trademark on registration being granted to the same as a design, and a registrant is to be deemed in law to have surrendered, abandoned, acquiesced and waived all rights to use such features as a trademark. A prohibition contained in one statute has to be given effect to, while interpreting all other statutes.
Once the law relating to trademarks has been codified, saving the action for passing off in respect of unregistered trademarks, it is not open to contend that an action for passing off is divorced from rights as a trademark.
The Legislature in its wisdom chose to legislate separately for features of shape, configuration, pattern, ornament or composition of lines or colors applied to any article by enacting the Designs Act, 2000 and granting protection to them for a maximum period of 20 years. To hold, that though the legislative intent is to protect such features from use by another, for a limited period of 20 years only and to after the expiry of the said 20 years, allow the same to be used by others, the said features, though not permitted to be used as a trademark during the period of registration, after the said period qualify as a trademark and are protected from use by other, would again defeat the legislative intent.

The Court thus held that a registered design cannot constitute a trademark; however, if there are features other than those registered as a design and are shown to be used as a trademark and with respect whereto goodwill has been acquired, it is only those extra features which can be protected as a trademark. A registrant of a design would thus be entitled to maintain an action for passing off against other, not by showing that such another has adopted the registered design of the registrant but by showing that the product of such registrant, besides the registered design, also has other/extra features and goodwill in respect whereof has accrued and which extra features have been adopted / copied by another. For copying registered design however, only an action for infringement under the Designs Act would lie.

About Author

Lucy Rana

Lucy Rana is a Partner at S.S. Rana & Co. Her practice is focused on Intellectual Property and Corporate Law with emphasis on luxury goods, F&B, FMCG, hospitality, E-commerce, Information technology, automobile, sports and fitness, media and entertainment and the gaming industry industries. Lucy assists both multinational corporations and grassroot startups on all aspects of brand development from inception through international and national expansion and beyond.

Isheta Srivastava

Isheta Srivastava is an Associate Advocate at S.S. Rana & Co., a premier Intellectual Property Law Firm. She is a registered Advocate with Bar Council of India. She has completed her graduation from Symbiosis Law School, Noida and has done her Masters in Intellectual and Technology Law from National University of Singapore. She is skilled in Research and her areas of focus Intellectual Property Rights, Innovation and Information policy.