Case Analysis of Crocs vs. Liberty Shoes Ltd. and Ors.
Introduction
Everyday, thousands of cases are filed in courts across India. A lot of them deal with straightforward points of law but some of them deal with such issues that have huge ramifications.
One such case was filed by Crocs Inc. USA against Liberty Shoes Ltd. in the Delhi High Court and was taken up by Hon’ble Justice Valmiki J. Mehta.
Background of the case:
Crocs USA filed cases against shoe manufacturers alleging infringement of their design No. 197685 which is valid up to 28.05.2019.The designs are related perforated and non perforated shoe design. Cases were filed in various lower courts and against different manufacturers. In some of the cases ex-parte orders were issued by the court and in other cases matter was contested by the parties.
The facts in most of the cases were related to design infringement alleged by Crocs Inc. USA. The cases were at different stages in different courts and were later transferred to Delhi High Court for adjudication. Delhi High Court decided to club together all the pending applications and suits and heard them together.
Crocs Inc. USA had started filing suits against alleged infringers when they were informed of the same. Major players against whom cases were filed were Bata India, Relaxo Footwear Ltd, Coqui and ors.
Arguments of the parties
While deciding the case, the bench referred to the designs of the defendant’s product which were sold in India. The court came to the conclusion that most of the designs were remarkably similar to the design of plaintiff. The court also observed that there were minor changes in colour and placement of perforations but all in all the aesthetic effect were same.
The plaintiffs stated that their registered design was infringed upon the various defendants in some way or another. The most common design element that was copied, were signature gaps as the design element. The defendants stated that the alleged piracy and infringement never occurred as the said design of the plaintiff should not have been registered in the first place.
Defendants based their arguments on interpretation sub section 4 of section 22 of Designs Act.
Defendants also referred to Clauses (b) to (d) of Sub-Section (1) of Section of the Design Act.
To enunciate the legal point, operating part of the sections are reproduced below:-
- Cancellation of registration —
(1) Any person interested may present a petition for the cancellation of the registration of a design at any time after the registration of the design, to the Controller on any of the following grounds, namely:
(a) that the design has been previously registered in India; or
(b) that it has been published in India or in any other country prior to the date of registration; or
(c) that the design is not a new or original design; or
(d) that the design is not registrable under this Act;
As per the defendants the registered design of the plaintiff should not have been registered in the first place as its was neither new or original. They also stated that the design was in the public domain even before it was registered and so cannot claim exclusivity.
Findings of the Court:
As per the judge’s observation, the issues could be broken up in two different heads:
- Whether the plaintiff’s design was novel or not?
- Whether the plaintiffs design was in the public domain prior to registration or not?
For the purpose of rendering this judgement the court referred to Section 2(d), 4, 19 and 22 of the Designs Act.
The defendants referred to various downloaded pages from website of holey soles. As per the defendants the designs shown in the signs were available on the public domain since 2002. The said designs were remarkably similar to that of the plaintiff.
The court considered the defendants argument that the plaintiff can’t get the benefit of registered design as the remarkably similar designs of holey soles were available from 2002 and 2003 onwards. So, registration of the plaintiff’s design is not valid.
To decide whether plaintiff’s design was in the public domain or not the court referred to Reckitt Benkiser India Ltd. Vs. WYETH Ltd. [AIR 2013 Delhi 101 (FB)] where a full bench came to the conclusion that prior publication in a foreign country will amount to prior publication.
To read full judgement please click here.
Next issue which the court decided was whether the plaintiff’s design was new and original. The Court extensively referred to Section 22 of the Designs Act which deals with piracy of designs.
In this context, the court held that the plaintiffs design cannot be considered truly inventive or new because of prior publication in various companies and medium. Hence, the plaintiffs cannot allege infringement or piracy.
The Judge also referred to Pentel Kabushiki Kaisha & Anr. Vs. M/S Arora Stationers & Ors., to further determine if the design was new and original. The subject matter of the said design was a pen. The counsels had argued that as sweat and labor goes in making of such a design it can be said that the new design was novel. The court reasoned that a mere superficial difference in the design will not about to a new creation
The above mentioned principle was applied to the present case to determine if the product was new or not.
To read full judgement please click here.
Analysis
The case has set a new precedent when it comes to dealing with the design of a new product. In the present case, even though the plaintiff’s design was registered in different countries they never got the benefit of such registration as the court thoroughly went through the argument of being a new and innovative designed product. The court reasoned that to be new and original there should be a significant change in the existing design.
Even to figure out if the product was available in the public domain the court looked at all the design aspects that were available publicly. While citing the design elements found on the website of holey shoes the court reasoned as the designs were of similar nature that was enough to prove its prior existence.
In another first, the court imposed heavy costs on the plaintiff. Plaintiffs were asked to compensate the defendants to the tune of Rs. 2 Lakh over and above their legal costs. Such a heavy cost was imposed just to make the plaintiff realize the amount of harm it caused to other defendants when they got injunctions passed against the defendant.
Conclusion
This judgment comes as a relief to manufacturers and companies who use publicly available designs but are hampered by big corporations who use all the tricks in the book to get injunctions.
This tactic not only harms the people who try to bring down prices by making cheaper alternatives but also to those people who were clever enough to make use publicly available designs to run a business.
By imposing heavy costs, the court has also hinted that suppression of facts and getting interim injunctions will ultimately harm the person who got them fraudulently.
