Supreme Court Formulates Two-Pronged Test to Determine Eligibility for Protection Under Designs Act

 

Summary

The Supreme Court of India developed a comprehensive two-pronged test to resolve complexities arising from Section 15(2) of the Copyright Act, providing clarity on whether a work qualifies for protection under the Designs Act and establishing standards for distinguishing artistic works from industrial designs.

Introduction

This appeal concerns a dispute regarding alleged infringement of intellectual property rights relating to the design and manufacture of internal components of Cryogenic Storage Tanks and Distribution Systems mounted on Trailers and Semi-Trailers used for efficient transportation of industrial gases, liquefied natural gas (LNG), and similar substances. On September 24, 2018, Respondent No. 1, Inox India Limited (Inox), filed Trademark Suit No. 3/2019 before the Commercial Court against the Appellants, Cryogas Equipment Private Limited (Cryogas) and LNG Express India Private Limited (LNG Express). Inox alleged that the Appellants infringed two categories of copyright: (i) engineering drawings of LNG Semi-trailers created by Inox (Proprietary Engineering Drawings), and (ii) written details, processes, descriptions, and narrations prepared by Inox employees in developing those drawings (Literary Works). Inox claimed these intellectual property materials were developed to address specific requirements for designing and manufacturing advanced LNG Semi-trailers suitable for Indian road conditions.

Arguments Advanced by the Appellants

The Appellants' counsel contended that LNG and Cryogenic Semi-trailers worldwide are designed in accordance with international standard-setting bodies, including the American Society of Mechanical Engineers (ASME) and the Pressure Equipment Directive (PED). Consequently, all industry participants, including the parties involved, comply with PED requirements and guidelines issued by the Ministry of Road Transport and Highways of India. The Appellants argued that the suit is barred under Section 15(2) of the Copyright Act, as Inox's Proprietary Engineering Drawings are capable of registration under the Designs Act. The Appellants submitted that Inox failed to disclose in its plaint the number of Semi-trailers manufactured through industrial processes. Instead, Inox employed strategic pleading by merely mentioning revenue of ₹122 crores—an attempt to avoid Section 15(2) implications. Given this revenue scale, it is reasonable to infer that Inox produced more than fifty Semi-trailers, thereby attracting the statutory bar under Section 15(2) of the Copyright Act.

Arguments Advanced by the Respondents

The Respondents' counsel refuted these assertions, submitting that the suit concerns two distinct copyright categories: Proprietary Engineering Drawings and Literary Work. Consequently, the reliefs sought are separate in nature, and each intellectual property claim must be evaluated independently, considering its specific attributes and legal implications. They argued that Section 15(2) of the Copyright Act has no application because the Proprietary Engineering Drawings are not capable of registration under the Designs Act, and the Literary Work is not subject to the statutory bar under Section 15(2). The Respondents contended that the Commercial Court erred in treating the Literary Work—which includes details, processes, and descriptions—as merely ancillary to the Proprietary Engineering Drawings. This approach incorrectly presumes that all rights asserted in the plaint are inherently tied to engineering drawings. According to the Respondents, alleged infringement arising from misappropriation of confidential information constitutes a separate legal issue unaffected by Section 15(2). They further argued that the three intellectual property issues raised in the suit are distinct, a fact overlooked by the Commercial Court while allowing LNG Express's application under Order VII Rule 11 of the Code of Civil Procedure.

Supreme Court's Analytical Framework

To resolve this legal conundrum, the Supreme Court examined established jurisprudence and comparative legal frameworks, analyzing: (i) the approach adopted by Indian courts; (ii) factors considered by courts in the United States of America; and (iii) broader international principles illuminating the interplay between copyright and design protection. The Court held that the inquiry cannot proceed on the simplistic assumption that any work not qualifying as an 'artistic work' under the Copyright Act would automatically fall within protection of the Designs Act. Although protection under the Designs Act is of shorter duration than copyright, it is not granted by default and must satisfy specific statutory criteria.

Two-Pronged Test Formulated by the Supreme Court

The Court observed that Indian courts and courts abroad consistently apply the test of 'functional utility' to determine whether a work is eligible for design protection. The Court formulated a two-pronged test to address complexities arising from Section 15(2) of the Copyright Act and to determine whether a work qualifies for protection under the Designs Act:

First Prong: Examine whether the work is purely an 'artistic work' entitled to copyright protection, or whether it is a 'design' derived from an artistic work and subjected to an industrial process, as contemplated under Section 15(2).

Second Prong: If the work does not qualify for copyright protection, apply the test of 'functional utility' to ascertain its dominant purpose and determine whether it qualifies for registration under the Designs Act.

The Court emphasized that this inquiry must be case-specific, guided by statutory provisions, judicial precedents, and comparative legal principles, ensuring that rights under each regime serve their intended objectives without encroaching upon the other. This framework clarifies treatment of works situated at the intersection of copyright and design law, promoting consistency in application of intellectual property rights in India.

Distinction Between Section 15(1) and Section 15(2)

The Court further clarified that Section 15(1) of the Copyright Act applies where a design has been registered under the Designs Act, thereby barring any claim of copyright protection. In contrast, Section 15(2) requires substantive inquiry into whether the drawing in question falls within the ambit of the Designs Act. This necessarily means that a suit cannot be dismissed at the threshold under Order VII Rule 11(d) of the Code of Civil Procedure solely on the basis of the plaint. The central issue remains whether the Proprietary Engineering Drawings constitute 'artistic works' under Section 2(c) of the Copyright Act or fall within the definition of a 'design' under Section 2(d) of the Designs Act—an issue that warrants detailed examination.

Procedural Implications

The Court held that the issue of whether the original artistic work falls within the definition of a 'design' under the Designs Act cannot be determined at the stage of deciding an application under Order VII Rule 11 of the Code of Civil Procedure. At that stage, the court is confined to prima facie examination limited to assessing whether the plaint discloses a cause of action. Determining the true nature of 'Proprietary Engineering Drawings' involves a mixed question of law and fact, which cannot be resolved at a preliminary stage based on superficial or cursory reading of the plaint. Such determination requires full-fledged trial where both parties have opportunity to lead evidence.

Significance

This landmark judgment provides crucial clarity on the intersection between copyright and design law in India. The two-pronged test offers a structured analytical framework for courts, practitioners, and rights-holders to determine whether works qualify for protection under the Copyright Act or the Designs Act. By emphasizing functional utility analysis and requiring case-specific examination, the Supreme Court has ensured that intellectual property regimes operate harmoniously without overlap or conflict. The ruling reinforces that threshold dismissals under Order VII Rule 11 are inappropriate for complex questions involving mixed law and fact, particularly in intellectual property disputes where detailed evidentiary examination is necessary. This decision will significantly influence litigation strategy in copyright and design disputes, ensuring that substantive rights are not defeated by premature procedural determinations. The judgment establishes India's position on applying functional utility tests aligned with international best practices while maintaining fidelity to domestic statutory frameworks.