Protecting property rights through common law remedies
By Subhash Bhutoria
Contributing to the growing domestic IP jurisprudence, the Delhi High Court has recently upheld unfair competition tort in a matter pertaining to data and information emanating from a cricketing event and held that such information qualifies as quasi-property. This article briefly discusses the said emerging trend of protecting property rights through common law remedies and its plausible outcomes and consequences.
Common law remedy under Indian IPR Regime
The Indian IPR laws have selectively recognized the economic tort of unfair competition. In case of trademarks, the Trade Marks Act of 1999 provides for a non-obstante provision i.e. Section 27(2), which allows a person to initiate an action for passing off in case of unregistered trade mark. However, such provision is not recognized in copyright, design or patent statutes.
Till recently, the Indian Courts recognized unfair competition tort (passing off) only in trademarks. However, in 2012, Bombay High Court observed that passing off action may lie against a design violation, provided that the consumers associate the unique design with the source and that the infringer has copied the design with mala fide to deceive the consumers. [Videocon Industries Limited v. Whirlpool of India Limited, 2012 (6) BomCR 178]
The aforesaid position of law is further clarified by the Larger Bench of Delhi High Court in the case of Micolube India Limited v. Rakesh Kumar & Ors., [Delhi High Court in Civil Suit being CS (OS) No. 384 of 2008 on 15-5-2013] which upheld that passing off remedy is available in respect of a design, which is used as trade mark upon lapse of the term of registration. Therefore, the tort of unfair competition is also recognised in design actions.
However, no precedent has yet hinted to the application of unfair competition tort in copyrights. One reason may be that the Copyright Act, 1957 does not recognize any copyright or similar right accrued in any work, which is not in accordance with the Act. In fact, the Division Bench of Delhi High Court observed in the case of Time Warner Entertainment Co. v. RPG Netcom & Ors., [2007 (34) PTC 668 (Del)] that:
“Section 16 of the Act specifically bars a person from claiming copyright or any other similar right in any work otherwise than in accordance with the provisions of the Act itself or any other law in force…The appellant-plaintiffs cannot claim copyright and sue for infringement of copyright de-hors the Act. Common law rights under copyright law were abrogated earlier by Section 31 of the Copyright Act, 1911, which was enacted to amend and consolidate the law relating to copyright.”
The Division Bench further observed that:
“Action for passing off can be initiated, where interest of an author or owner of a copyright work in his business reputation and goodwill is damaged by misrepresentation that falls outside the copyright law, i.e. the Act. Passing off action will be maintainable, when the claim is not based on infringement of copyright but damage to reputation and goodwill of the proprietor and the said damage is caused by deceit or misrepresentation by the defendant.”
Apparently, common law remedy is not available against any copyright violation. However, the remedy is available for non-copyrightable data or information, which have accrued quasi-property right.
Property Rights are classified on the basis of their characteristics. However, the existing classification is inadequate to categorize certain rights which may also qualify as properties. One such category is “Quasi-property rights”. Unlike the popular concept that property rights are available In Rem, quasi-property rights are exercised against a specific class of users, generally the competitors.
Equity Courts began using the term “Quasi-property” to describe interests that resembled property rights in their functioning even when they were not property rights, or, strictly speaking, ownership interests (see end note 1). The quasi-property rights were popularized by the early 20th century judgment by the US Supreme Court in the case of International News Service v. Associated Press (INS case - 248 US 215). In the INS case, the respondent claimed quasi-property rights in the news reports. The Court held that:
“…For, to both of them alike, news matter, however little susceptible of ownership or dominion in the absolute sense, is stock in trade, to be gathered at the cost of enterprise, organization, skill, labor, and money, and to be distributed and sold to those who will pay money for it, as for any other merchandise. Regarding the news, therefore, as but the material out of which both parties are seeking to make profits at the same time and in the same field, we hardly can fail to recognize that for this purpose, and as between them, it must be regarded as quasi property, irrespective of the rights of either as against the public”
INS case recognised quasi-property right in short duration news (Hot News) and upheld that its use by the competitor amounts to unfair competition. (Hot News Doctrine). However, the courts, in subsequent decisions, further narrowed down the scope of this doctrine and repetitively held that the quasi-property claim survives on blatant and true “Free Riding” [Barclays capital v. Theflyonthewall.com, 650 F.3d 876 (2d Cir. 2011)]. In the landmark case of National Basketball Association v. Motorola Inc. (NBA case - 105 F.3d 841), the US Court of Appeals held that:
“The surviving "hot-news" INS-like claim is limited to cases where: (i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant's use of the information constitutes free riding on the plaintiff's efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.”
The Star India case
The court upheld the claim of quasi-property rights in cricket scores and held that its publication through SMS, amounted to unfair competition (see end note 2). Star India instituted three separate actions against violation of ‘bouquet of rights’, which were assigned to the plaintiff by Board of Control for Cricket in India (BCCI). Plaintiff’s case was that it had the exclusive rights in all and every information emanating from a cricketing event organized by BCCI and therefore, dissemination of such information through live score cards, match updates, score alerts via SMS by the defendants amounted to the tort of unfair competition. The plaintiff based its whole cause of action de hors the Copyright Act, 1957 claiming quasi-proprietary rights accrued in the information. The defendants opposed claim of common law remedy and contended that the information was publici juris before they disseminated the same.
The court primarily based its reasoning on the Hot News Doctrine and held that although the NBA case might have “watered down” the doctrine, the Five Factor Test retained the primacy of fundamental principle of unjust enrichment. It opined that the defendants incurred the expenditure for process of dissemination of information and not towards the organization of the event or in the process of legitimately obtaining the information from the plaintiff or BCCI. It held that defendants’ action constituted free riding amounting to unfair competition. As a balancing act, it held that the defendants could provide the match updates with a delay of 15 minutes without seeking any license from the plaintiff or the organizer.
With the advent of quasi-property rights, information, products, services or assets, which are outcome of skill, expenditure and labour, may be protected like a property and any violation or misappropriation thereof would give rise to a cause of action. However, the applicability of quasi-property rights is a highly contested issue globally as it may open floodgate of property related litigation as is also observed in the NBA case.
The Star India case is certainly a step forward in domestic property jurisprudence. However, the judgment has overlooked material aspects. Importantly, the court appears to have misconstrued the Five Factor NBA Test and also overlooked the narrow interpretation of the Hot News Doctrine as held in the Barclay’s case (supra). The court held that out of five factors, three have retained the fundamental principle of unjust enrichment and hence the test is satisfied in the facts of the case. On the contrary, the test lays down that a quasi-property claim survives only when all the five factors in the test are satisfied, especially the factor relating to passing off. Though the Star India case has introduced the quasi-property rights, the same is not in consonance with foreign precedents and hence lacks parity.
Further, taking a cue from the recent Micolube Judgment (supra), it may be suggested that upon lapse of design registration, the owner can also claim quasi-property rights in the design and may initiate a passing off action against the infringer on the basis of a quasi-property claim. Further, Confidential Information or Trade Secrets, which are not yet protected under sui generis laws, may also get covered under the quasi-property rights. Apparently, the quasi-property rights may open floodgate for property right claims and hence its precincts be defined by cautious legal interpretations.
1. Shyamkrishna Balganesh, Quasi-Property: Like but not quite Property, University of Pennsylvania Law Review [Vol. 160] P. 1889
2. Star India Pvt. Ltd. v. Piyush Agarwal & Ors., MIPR 2013 (1) 201
[The author is a Senior Associate, IPR Practice, Lakshmikumaran & Sridharan, New Delhi]