Unclogging Indian Design Law: The Delhi High Court Ruling in the Crocs Appeals
Almost nine months after the conclusion of final arguments, the Delhi High Court decision in the Crocs design infringement appeals has been made available today.
The decision, authored by Mr Justice Bhat for himself and Mr Justice Chawla, dismisses Crocs’ appeals, and finds that Mr Justice Mehta’s February 2018 decision declining interim relief to Crocs warrants no interference.
(ICYMI: Crocs filed eight lawsuits for design infringement and passing off/shape mark infringement against various Indian footwear manufacturers between 2014 and 2018. On February 8, 2018, Mr Justice Mehta ruled on the heavily contested claims, declined interim judgment to Crocs. A discussion of the key findings of Mr Justice Mehta’s ruling is here. Crocs’ appeals against Mr Justice Mehta’s ruling were heard by Mr Justice Bhat and Mr Justice Chawla over the early summer of 2018, and eventually taken under advisement on May 8, 2018. Today’s judgment is the result.)
The Delhi High Court appeals decision discusses four issues of note, which I now take up in turn.
Crocs’ Footwear Design Registration Was Previously Published
On prior publication and novelty/originality, the Crocs Court’s inquiry is a limited one. In its capacity as an appeals court, it is merely required to ask whether Mr Justice Mehta’s exercise of discretion was unreasonable or flawed.
On prior publication, Mr Justice Bhat affirms two crucial pieces of evidence that make Crocs’ case untenable.
The first of these are two extracts from the website of a Canadian competitor (Holey Soles, now known as Holeys) from December 2002 and February 2003 which reproduce the Crocs design. (Crocs’ own best case on exclusivity dates back to May 2003.)
Crocs’ failure here turns, critically, on its “inability to produce copies of print-outs of material downloaded from the [Holey Soles] website, as on [December 2002] and [February 2003]”.
The Court finds no obvious error in this approach.
The second fact within Mr Justice Bhat’s field of vision is the European General Court’s rejection of Crocs’ EU design registration in Gifi Diffusion v EUIPO. It confirms this Court’s belief that Crocs’ defence against prior publication was untenable.
The Court notes that “this decision [Gifi Diffusion] was not available when [Mr Justice Mehta’s] impugned order was made”. Confusingly, Gifi Diffusion is identified as a cancellation that occurred “in 2016”; it is, in fact, a March 2018 ruling that closes a 2016 proceeding.
Even so, Mr Justice Bhat is broadly correct: the material pending consideration before the European General Court (then sub judice) was not available to Mr Justice Mehta.
However, this does open a curious line of inquiry: a simple look through the European proceedings at the time of Mr Justice Mehta’s ruling would have brought forward a trove of compelling material to suggest that Crocs’ defence on prior publication was a non-starter. This includes:
- Evidence of prior publication of Crocs’ design on its own website in November-December 2002;
- Evidence of the clog corresponding to Crocs’ design at issue having been put on the market in July 2002;
- Evidence that it had been exhibited in November 2002 at the Fort Lauderdale Boat Show and that the clogs to which the design at issue had been applied had been “a smashing success”;
- Evidence from Crocs’ website showing a clog with a heel strap marked “© 2003”;
- Evidence of publicity material from Crocs’ own websites that, “by 2003, Crocs had become a bona fide phenomenon, universally accepted”; and
- Evidence that the clogs to which the design had been applied were available for sale before the May 2003 cutoff, at least through a distributor identified as Western Brands, and several retailers in the United States identified by name.
However, there is nothing on record to suggest that this material was presented to Mr Justice Mehta. As such, even though Mr Justice Bhat’s reluctance to go into this material is an unhappy one, it is of little consequence under the circumstances.
The Crocs Court therefore finds, unexceptionably, that Mr Justice Mehta’s conclusion on prior publication was supported by “a careful, thorough prima facie analysis of the materials on record”.
Crocs’ Design Does Not Survive the Threshold for Design Novelty
On novelty, the thrust of Mr Justice Bhat’s inquiry is directed at identifying material that defines the catchment area for a novel design through exclusion. It is an extremely functional (if unsystematic) approach, and it leads him to exclude from the subject matter of novelty: (i) a well-known or naturally occurring design; and (ii) a mere trade variation of an existing design.
From the standpoint of precedent, this is, of course, well-trodden ground. However, there is a difficulty here: it undersells the standards for novelty expressed and applied by the ruling it sits in appeal of.
Revisiting the impugned ruling, it is apparent that Mr Justice Mehta’s tenor suggests a far stricter threshold for novelty in a design; one that insists that novelty cannot be asserted over common articles.
This much is clear from a passage in which he observes that “all the different types of footwear are variations of nothing else but [footwear]”, and that it would take “an effort larger than an ordinary effort to create a different footwear than the known types of footwear”.
This is not addressed by the appeals court. As such, there is certainly room to suggest that Mr Justice Mehta’s threshold for design novelty — now endorsed in appeal — is considerably more exacting than that prescribed by existing case law.
Plainly, there is a gap between what the two Crocs Courts understand to be novel, and it is not so simple a matter as Mr Justice Mehta’s opinion being “expressed in an unusual manner”, as Mr Justice Bhat insists.
Other than that, Mr Justice Bhat’s exclusions come across as perfectly acceptable thumb rules. (They are, of course, qualified by his acknowledgement that the discussion is limited to the examination of the materials on record.)
It Is “Not Appropriate” to De-Link Connected but Independent Suits for Design Infringement and Passing Off
Six weeks ago, a five-judge ruling of the Delhi High Court in Carlsberg v Som Distilleries had settled a long-standing, though extremely narrow, quarrel on composite claims for design infringement and passing off. It had ruled that it was permissible for Claimants to combine design infringement and passing off claims in the same suit.
The Crocs claims in appeal here were instituted at a time when the field was occupied by 2013’s three-judge Delhi High Court ruling in Mohan Lal v Sona Paint. This decision had suggested that they could not be so combined. Carlsberg, as Mr Justice Bhat notes here, overrules Mohan Lal to that extent.
[A 2017 explanation I wrote of the composite claim issue, siding with (what would later become) the Carlsberg interpretation, is here.]
However, the question before this Crocs Court is slightly different. It asks, should design infringement and passing off claims on the same subject — instituted separately prior to Carlsberg — now be permitted to navigate through trial as independent claims?
The appeals court says they should not. Mr Justice Mehta had, consistent with his view derived from Mohan Lal on the separability of the actions, asked that the suits for design infringement be de-linked from the suits for passing off/shape mark infringement.
(An important caveat is necessary here: Mr Justice Mehta’s ruling impugned here had arrived ten months prior to Carlsberg. It is likely, therefore, that he would have taken a different view, with the benefit of the Carlsberg ruling. Mr Justice Mehta did, in fact, go on to write the principal affirming opinion in Carlsberg, so this second-guessing hardly qualifies as conjecture.)
After Carlsberg, the ‘permissibility of separate actions’ argument, of course, no longer survives. However, there is a difference between permissibility and desirability, and it is the latter that this Crocs Court rules against.
Mr Justice Bhat hints at a practical reason for permitting complementary design infringement and passing off claims to travel together: that interim orders in one suit may be intended to cover the other, but may not carry independent reasoning justifying findings on both types of claims.
On the face of it, this is undoubtedly a sensible approach. However, it does look to excuse the lack of comprehensiveness of interim orders passed in these cases. It is hardly an unfair expectation to require interim orders to be complete enough to not require them to be saved by this kind of maneuvering. The criticism carries particular merit when set against the fact that they were issued under a body of composite claim law still governed by Mohan Lal at the time.
The Decision to Impose ₹200,000 (~US$2800) Plus Legal Costs per Defendant “Cannot Be Termed Unreasonable”
Mr Justice Bhat’s costs finding is anchored by three important acknowledgments.
First, he notes that Indian civil litigation has traditionally shied away from imposing high (or even representative) costs as penalties. It is to address problems born of this reticence that the revamped costs scheme under The Commercial Courts Act has been introduced.
Second, he outlines an unambiguous rationale for imposing costs in civil claims: that it should serve as “adequate indemnity for the expenditure incurred” by the litigants to whom costs are awarded.
Finally, he stresses that both functions of imposing “real” costs — as a tool of actual compensation/reimbursement and in execution of the principle that costs must follow the event —should be tethered by judicial discretion to avoid inequitable outcomes.
This is valuable commentary on the costs regime introduced by The Commercial Courts Act. The extra effort expended in highlighting the need to guard against mechanical application of the costs principles — which, as Mr Justice Bhat notes, often favour deep pocket litigants — invites particular appreciation. To be sure, the framing of this commentary does raise a concern about whether the deep pocket illustration will be read by judges as a defined exception rather than just an example. However, that is a minor nitpick with what is, prior publication spadework and novelty ambiguity apart, an excellent decision.
