Intellectual Property Rights in India: An Overview of the Legal Framework and Case Laws

The term “Intellectual Property Rights” has not been defined under any Indian statute. As per the World Intellectual Property Organization (WIPO), Intellectual property refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. Primarily, there are nine categories of Intellectual Property:

• Copyright and related rights
• Trade Marks including service marks
• Geographical indications
• Industrial designs
• Lay-out designs of integrated circuits
• Trade secrets
• Patents
• Patenting of micro-organisms and New plant varieties (seeds and other propagating material)

India, being a signatory of Trade-Related Aspects of Intellectual Property Rights, has enacted various statutes to protect and deal with the most of the Intellectual Property Rights, as mentioned above.

Now, let us refer to some of the Indian case laws to find out the attributes of the intellectual property rights:

Ø  In the case of The Institute of Chartered Accountants of India vs. Shaunak H. Satya and Ors. (AIR2011SC 3336), the Hon’ble Supreme Court of India has relied on the definition of the Intellectual Property as provided in Black’s Law Dictionary, 7th Edition, page 813, which states as under:

“The term ‘intellectual property’ refers to a category of intangible rights protecting commercially valuable products of human intellect comprising primarily trade mark, copyright and patent right, as also trade secret rights, publicity rights, moral rights and rights against unfair competition (vide Black’s Law Dictionary, 7th Edition, page 813).“

Ø  In the case of Gurukrupa Mech Tech Pvt.Ltd. vs. State of Gujarat and Ors. (2018)4GLR3324, the Hon’ble Gujarat High Court has defined the Intellectual Property, as under:

The World Intellectual Property Organization (WIPO), the apex institution governing the Intellectual Property Rights, has described the Intellectual Property as “Intellectual property refers to creations of the mind: inventions; literary and artistic works; and symbols, names and images used in commerce.”

29. The Supreme Court has equated an intellectual property with tangible property and has upheld its constitutional validity under Article 300A of the Constitution. In K.T. Plantations Pvt. Ltd. v. State of Karnataka [MANU/SC/0914/2011 : (2011) 9 SCC 1]. The Supreme Court held that “Article 300A proclaims that no person can be deprived of his property save by authority of law, meaning thereby that a person cannot be deprived of his property merely by an executive fiat, without any specific legal authority or without the support of law made by a competent legislature. The expression ‘Property’ in Art. 300A is confined not to land alone, it includes intangibles like copyrights and other intellectual property and embraces every possible interest recognized by law.”       

….. Intellectual property is
basically incorporeal property which is a product of original thought….

71. The Intellectual Property Law is a negative right which means it is a right to exclude others from using the property generated by the registered owner. It is thus obvious that this law anticipates pre-emptive measures to prevent the misuse, as the property is intangible per se. Any reproduction in tangible medium becomes susceptible to misappropriation therefore, the statutory rights ought to be protected.

Ø  In the case of State of Kerala vs. The Malayala Manorama Company Limited, 2017(2)KLT36, the Hon’ble Kerala High Court described  the Intellectual Property Rights, as under:

Intellectual property rights on the other hand represent monopoly of intellectual creation of the owner of such rights. It is more understood as conceptional rights on intangible and incorporeal properties. Ownership rights cannot be synonymously understood as intellectual property rights though such rights may overlap other rights in certain circumstances. The distinction however narrow or thin as the case may be, the legal distinction is copious and lucid. Consider, ‘A’ goes to buy the DVD of a cinema or a book over which ‘B’ has the copyright; the owner of the DVD or the book will be ‘A’ and all the right to use the DVD or book would be governed by the copyright owned by “B”; thus it is possible one may be the owner of a material article and other may be the owner of a copyright…..

Ø In the case of McDonalds India Pvt. Ltd. and Ors. vs. Commissioner of Trade & Taxes, New Delhi and Ors. 2017VIIAD(Delhi)350, the Hon’ble Delhi High Court described  the Intellectual Property Rights, as under:

47. The peculiarity of intangibles or incorporeal property, of the kind this court has to deal with, i.e. intellectual property, is that unlike real property, its boundaries are unset. These rights are only real and effective to the extent they enable the owner or transferee to “keep out” from use those who are not permitted to do so. In other words, the nature of intellectual property and the remedies provided for their enforcement, hinge upon the right to exclude others from using it….

Ø  In the case of. Mangalore Ganesh Beedi Works vs. Commissioner of Income Tax, Mysore and Ors. (2016)2SC C 556, the Hon’ble Supreme Court of India has held that the intellectual property such as trademarks, copyrights and know-how fall within the definition of ‘plant’. The relevant extract from the judgment is as under:

31. The question is, would intellectual property such as trademarks, copyrights and know-how come within the definition of ‘plant’ in the ‘sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it’? In our opinion, this must be answered in the affirmative for the reason that there can be no doubt that for the purposes of a large business, control over intellectual property rights such as brand name, trademark etc. are absolutely necessary. Moreover, the acquisition of such rights and know-how is acquisition of a capital nature, more particularly in the case of the Assessee. Therefore, it cannot be doubted that so far as the Assessee is concerned, the trademarks, copyrights and know-how acquired by it would come within the definition of ‘plant’ being commercially necessary and essential as understood by those dealing with direct taxes.

Ø  In the case of CUB PTY Limited vs. UOI and Ors., New Delhi and Ors. [2016]241TAXMAN278(Delhi), the Hon’ble Delhi High Court while dealing with a question relating to the place of taxability, leviable on the transfer of trademarks, held as under:

2 0 . Thus, the legislature, where it wanted to specifically provide for a particular situation, as in the case of shares, where the share derives, directly or indirectly, its value substantially from assets located in India, it did so. There is no such provision with regard to intangible assets, such as trademarks, brands, logos, i.e., intellectual property rights. Therefore, the well accepted principle of ‘mobilia sequuntur personam’ would have to be followed. The situs of the owner of an intangible asset would be the closest approximation of the situs of an intangible asset. This is an internationally accepted rule, unless it is altered by local legislation. Since there is no such alteration in the Indian context, we would agree with the submissions made on behalf of the petitioner that the situs of the trademarks and intellectual property rights, which were assigned pursuant to the ISPA, would not be in India. This is so because the owner thereof was not located in India at the time of the transaction.

From the above judgments, the attributes of Intellectual Property Rights can be summarized as under:

• Intangible and Incorporeal in nature
• Creation of the mind
• Article 300A of the Constitution of India even protects Intellectual Property
• They are negative rights which means it is a right to exclude others from using the property generated by the owner
• Intellectual property rights represent monopoly of intellectual creation of the owner of such rights
• The peculiarity of intellectual property is that unlike real property its boundaries are unset
• The intellectual property such as trademarks, copyrights and know-how fall within the definition of ‘plant’ for the purpose of taxation. 
• The situs of the owner of an intangible asset would be the closest approximation of the situs of an intangible asset