Supreme Court Defines Boundaries Between Copyright And Design In Industrial IP Disputes

Introduction:

In a landmark ruling, the Supreme Court of India has provided much-needed clarity on the interplay between copyright and design rights in the context of industrial applications. The judgment in Cryogas Equipment Pvt. Ltd. v. Inox India Ltd. & Others settles critical questions around the applicability of Section 15(2) of the Copyright Act, 1957, to industrial drawings and the circumstances under which copyright protection ceases.

Facts:

Inox India Limited filed a suit in 2019 before the Commercial Court, Vadodara, against Cryogas Equipment Pvt. Ltd. and LNG Express India Pvt. Ltd., alleging infringement of intellectual property in the form of:

1. Proprietary Engineering Drawings related to LNG semi-trailers,
2. Accompanying Literary Works (technical descriptions and process narratives).

Inox claimed that Cryogas and others misused these materials to manufacture cryogenic semi-trailers. The reliefs sought included a declaration of copyright infringement, permanent injunctions, destruction of infringing materials, and damages of ₹2 crores.

LNG Express responded by filing an application under Order VII Rule 11 of the Civil Procedure Code, seeking rejection of the suit. Their argument: the drawings in question were designs under Section 2(d) of the Designs Act, 2000, and not registered. Hence, under Section 15(2) of the Copyright Act, copyright protection was no longer available.

The Commercial Court initially accepted this argument and dismissed the plaint. However, the Gujarat High Court reversed this, reinstating the suit and the interim injunction. The matter then reached the Supreme Court.

Issues:

The Supreme Court dealt with two central issues:

1. Whether the proprietary drawings fall within the exclusionary clause of Section 15(2) of the Copyright Act, thus requiring design registration to maintain protection.
2. Whether the High Court erred in setting aside the Commercial Court’s decision to reject the plaint under Order VII Rule 11 CPC.

Arguments Of The Parties

Appellants

• The engineering drawings are “designs” under the Designs Act and capable of registration.
• Since they were used in manufacturing more than 50 semi-trailers, copyright automatically ceased under Section 15(2).
• The design lacked artistic character and was functionally driven, complying with international standards like ASME and PED.
• The dispute should have been adjudicated under the Designs Act, not the Copyright Act.

Respondents

• The suit involved distinct IP elements: engineering drawings (artistic work) and literary narratives.
• Drawings related to internal components lacking visual appeal and hence not eligible for registration as designs.
• The Literary Works are purely textual and do not fall under the purview of the Designs Act.
• Allegations of theft of confidential information go beyond the scope of Section 15(2) and must be adjudicated independently.

Analysis By The Supreme Court

The Court undertook a comparative legal analysis by exploring Indian case law and global jurisprudence, including decisions from the US and the UK.

• Two-Pronged Test Introduced:

1. Whether the work is purely an artistic work or a design derived from it, and has been used industrially (as per Section 15(2)).
2. If not protected by copyright, does it qualify for design registration by assessing its functional utility?
3. Clarification on Section 15(2):
4. Copyright protection ceases for designs capable of registration once reproduced over 50 times industrially unless registered.
5. However, copyright in the original artistic drawing remains intact until industrial reproduction occurs.
6. Industrial Use and Functionality:

1. If the primary purpose is functional, the work shifts from copyright to design domain.
2. Visual appeal is a subjective factor, but not the sole determinant.

Judgement of the Supreme Court

Having thus examined the vagaries of IP law and the intrinsic synergy that exists between two independent legislations, namely the Designs Act and the Copyright Act, the Supreme Court dismissed the instant appeals with the following conclusions and directions:

1. The decision of the High Court rejecting the application under Order VII Rule 11 of the CPC is upheld; 
2. The Commercial Court is directed to deliver its decision on the pending application seeking interim injunction preferred by Inox, within a period of two months;
3. The Commercial Court is further directed to conduct trial and discern the true nature of the Proprietary Engineering Drawings based upon the test laid down in paragraph 60 of the judgement, as also the other related IP right infringements claimed by Inox, within a period of one year, given that it has already wasted significant judicial time on this issue.