Trademarks : Iceland v. Iceland : The battle for exclusivity

Iceland (the country ) is a leading exporter of frozen fish and seafood to several countries in the EU. Recently, native companies like ‘Clean Iceland’ and ‘Iceland Gold’ have faced trouble in marketing their products due to confusion over the name which clashes with ‘Iceland Foods’ – a renowned frozen food supermarket chain that has subsisted since the 70’s.

‘Iceland Foods’ for several years used to be under the control of Icelandic investors and later Icelandic banks. As the spokesperson for the retailer said, “the relationship came to an end with a £1.5bn buyout of the company in 2012, but Iceland the company has continued to have a good relationship with Iceland ,the country through the ownership of three Iceland stores there, export sales of Iceland products to other retailers throughout the country, and sponsorship of the Icelandic national team in this year’s European football championships.”

‘Iceland Foods’ is currently a UK-based but South African owned supermarket chain.

The Icelandic government has begun legal proceedings to ensure that the trademark of ‘Iceland’- that is exclusively owned by the supermarket chain is cancelled. These steps have been taken primarily to protect native companies that are unable to promote themselves abroad in association with their place of origin, as is their right, for it is a place that they are rightly proud of and which enjoys a positive national branding.

The supermarket’s founder and chief executive, Malcolm Walker, said: “A high-level delegation from Iceland Foods is preparing to fly to Reykjavik this week to begin negotiations, and we very much hope for a positive response and an early resolution of this issue.”

The negotiations are hoped by both sides to bring an end an issue that has the potential to erupt into a long-term battle. According to Iceland Foods, they have no desire to stand in the way of a country that is making use of their own name to promote their goods as long as it does not conflict with the long standing business that the supermarket chain had established over the years.

The Icelandic government has also been clear on its stance and it does not intend to force the supermarket to register a new name, it is only seeking to end the company’s right to assert the Iceland trademark to block native companies from using “Iceland.”

An end to trademark grabbing in China

Will the introduction of a new Trademark Law in China address the issue of trademark grabbing by unauthorized Chinese parties, 

At the end of August, the Standing Committee of the National People’s Congress adopted the third amendment to the Trademark Law of the People’s Republic of China, which will enter into force on May 1, 2014.What is the implications of the new law and does it address the concerns of trademark holders as to the rampant instances of trademark grabbing by unauthorized Chinese parties?

Challenges under the current trademark law

The actual trademark law, and the related case law of Chinese civil courts as well as the practice of the relevant administrative bodies in charge of trademark protection in China have clearly failed in preventing and punishing a most common form of trademark infringement in China, namely that of the so called trademark grabbing together with the related fall out of trademark trolls actions against foreign investors in China.

Trademark Grabbing

Under Chinese trademark law, only a registered trademark enjoys protection and the first person or entity to register it becomes its lawful owner, even if that trademark has already been used by others in China. Known as “trademark trolls,” certain Chinese companies or individuals are known to actively follow a strategy of registering intellectual property rights in China that arguably belong to their foreign competitors. Aware of the very strict “first to file” principle, they identify, apply and register trademarks belonging to competitors who have forgotten or not yet taken steps to register them.

The actual law and the related practice of all relevant civil and administrative bodies cannot prevent such occurrences. The usurped right holder’s only actual recourse is that of filing a trademark cancellation action and wait years for the hostile trademark to be cancelled, if this is actually really going to happen. The problem for the rightful trademark owner is that in the meanwhile, any act of manufacturing, selling, importing and offering for sale of his products with that stolen trademark, will constitute an act of infringement. The result: the grabber, aware of this, may file a civil or administrative enforcement, thus damaging the foreign company’s business and reputation. There have been indeed several of such trademark troll cases in China in the last years.

No right to prior use

The current legal system does not recognize any legal right to the prior use the foreign holder has made in China of that trademark before the registration of the same obtained by the usurper. The system does lack indeed a legal structure to balance the possible injustice created by the strict observance of the principle of “first to file”.

Trademark grabbing particularly affects medium and small foreign enterprises in China. Lack of knowledge of the trademark system of this country leads often to ineffective trademark filing policies. The loopholes left by unsystematic trademark filings are cleverly exploited by individuals (professional grabbers), competitors, and by local business partners. The latter may initially even do it in good faith, but may later discover that this is a very good bargaining weapon and a preventive tool in case they decide to leave the partnership and become competitors.

Seen in this perspective, trademark grabbing can indeed cause a business to be prevented or to be forced to leave the Chinese market in consequence to the “legal” loss of its brand and the related goodwill.

What solutions does the new Trademark Law hold?

The fact that trademark grabbing has actually reached levels that negatively affect fair competition and distort the principles backing the first to file system upon which the Chinese trademark law is based, has been now fully acknowledged and concrete changes of policy are now visible in the new trademark law.

The first acknowledgement of the existence of an unfair exploitation and abuse of the rule of first to file is the first time ever embodiment of the principle of good faith/bad faith in the trademark Law. Article 7 of the Trademark Law now expressly provides that the application for registration and use of a trademark shall be based on the principle of good faith. Such principle alone can constitute now a solid legal ground to file a trademark cancellation. Such wasn’t the case in the past, due to the lack of a legal base upon which to support a bad faith registration claim.

Aside from reinforcing the legal grounds for filing cancellations against the grabbed trademarks and speeding up the timing for completion of cancellation procedures, a most important change of policy and an exception to the “first-to-file” principle, is now contained in the new trademark law. For the first time in the history of the trademark law of China, if we exclude the case of unregistered well-known trademark, a right of prior use of a trademark in China is recognized under certain conditions, with a positive fall-out for the rightful owner in cases of trademark grabbing.

Article 59 of the third amendment of the trademark law provides that if someone has used a mark identical or similar to a registered trademark, in respect to identical or similar goods, before the date of filing of the latter trademark, and under the condition that the prior mark has meanwhile obtained a certain degree of reputation in China due to its use, the trademark registrant has no right to prevent the prior user from further employing such mark within the original scope of its use. At most, the trademark registrant may impose to the prior user the addition of an indication of distinction to the prior mark.

The norm goes even further by protecting the prior use of designs and shapes which may later form the body of a registered trademark or 3D mark. According to the same article 59, the exclusive right owner of a registered trademark may not prohibit others from the rightful use of the generic names, models or designs of the goods as included in the registered trademark, including registered 3D marks.

Even if the trademark grabber dared filing an enforcement lawsuit against the prior user, not only he would face the risk of rejection of his claims based on art. 59, but will also be subject to another risk related to the non-use of the stolen trademark. In fact, article 64 of the new trademark law provides that the alleged infringer, in this case the prior user, can raise non-use as a defense in a civil lawsuit for trademark infringement and the plaintiff has the burden to prove that he has used the trademark during the last three years from the date of the lawsuit.

If the Plaintiff fails to prove the use of the trademark as requested, the defendant will be exempted from the payment of any damages. Considering that in force of article 59 the prior user can continue to use its mark within its original scope of use, a lawsuit in such a case would be of no consequence for the prior user. Such situation is actually the most typical in cases of trademark grabbing. Most grabbers will in fact not use the trademark, given that the only purpose of stealing is to prevent the filing and use of the trademark by the foreign prior user.

A welcome addition

These new norms are a welcome addition to the Trademark Law. The prior user will have thus the right to continue to use his unregistered marks in China while attempting the cancellation of the stolen trademarks. This will give to the prior user and rightful owner of that sign to prepare and implement cancellations strategies without stopping his business in China.

At the same time, this norm should also discourage the trademark grabbers, especially the professional ones since they normally just grab marks but do not use them. In this respect, a further restraint from grabbing is provided by the new article 64, especially considering that most grabbers never use their trademarks and with such awareness will likely refrain from civil enforcement.

Sourcehttp://www.globallegalpost.com/global-view/an-end-to-trademark-grabbing-60583530/#.UmtsQXCky9Q

Trademark Infringement And Passing Off

Trademark is the identification mark of any company or organization. A customer relates any trademark with the quality of products and reputation of the company that is using it. It is a distinctive name, word, phrase, symbol, logo, design, image, or a combination of these elements that identifies a product, service or firm that has been legally registered as the property of the firm. Trademarks grant the owner the right to prevent competitors from using similar marks in selling or advertising.

There are few important functions of trademark:

A trademark can be used for identifying and distinguishing a particular seller’s goods from others. Trademark also shows the origin of the goods i.e. a customer can identify the manufacturer and also assume about the quality of goods that all goods bearing the particular trademark are of a particular quality desired by the customers. Trademarks are widely used for the advertisement purposes also which helps to customers in associating any good with the quality, reputation and goodwill of any company. So it is very important for any organization to take precautions while allowing any one to use its trademark because the name and reputation of the company is directly associated with the trademark.

Various new concepts have been emerged in relation to trademark due to the technological revolution in the communication, media and other areas and due to the increased knowledge and perception of individuals, business enterprises are showing more interest in registering non conventional marks such as colour marks, shape marks, smell marks, sound marks, advertisement slogans, trade dress etc. to capture the market.

How it can cause damage to a Company:

If any organization is using the registered trademark of another company without permission, that means it is not only committing a crime but also causing damage to the business of the company and damaging the brand name of that company. The organization might be using others trademark to use its market reputation and market stake to enhance its own business without extra efforts. But such companies are not using the exact trademark of other company but they generally go for use of similar marks and here the problem came in to existence. These kinds of activities mainly fall under two heads Infringement and Passing Off.

Infringement:

Section 29 of the Trademark Act-1999 talks about various aspects related to infringement as given in S.29(1) that a registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which is identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered and in such manner as to render the use of the mark likely to be taken as being used as a trade mark.

Other subsections describe that in course of the use of the trademark it is said to be infringing the rights of other company due to use of similar or identical trademark using for marketing of similar kind of goods and services or use of identical or deceptively similar trademark for any other kind of goods and services. It is further given in the Sub Section (9) of this section that the infringement can also be done by the spoken use of those words as well as by their visual representation.

Passing Off:

The specific description of passing off is not given in the trademark act but the courts have drawn its meaning from common law that if the infringement of trademark done in such a manner where the mark is not only deceptively similar to the trademark of other company but also creating confusion for the customers, which ultimately results in damage for business of the company.

Differences between Passing Off and Infringement:

They are slightly different to each other:

· Statutory remedy is available for infringement whereas the action for passing off is a common law remedy.

· For infringement it is necessary only to establish that the infringing mark is identical or deceptively similar to the registered mark but in the case of a passing off action, the need is to prove that the marks are identical or deceptively similar which is likely to deceive or cause confusion and damage to the business of the company.

· When a trademark is registered, registration is given only with regard to a particular category of goods and hence protection can be given only to these goods and action of infringement would be taken but in a passing off action, the defendant’s goods need not be the same, they may be related or even different.

Judicial Response:

Courts have given several judgements in these kinds of disputes where the infringement and passing off of trademark were in question. Few of them I am discussing in this paper where courts have dealt with these questions and formulated several concepts related to them.

Cases of Infringement;

No one can use the trademark which is deceptively similar to the trademark of other company. As in the case of Glaxo Smith Kline Pharmaceuticals Ltd. v. Unitech Pharmaceuticals Pvt. Ltd. [1] the plaintiff claimed that defendants are selling products under the trademark FEXIM that is deceptively similar to the plaintiff’s mark PHEXIN, which is used for pharmaceutical preparations. The defendants are selling anti-biotic tablets with the trademark `FEXIM' with the packing material deceptively similarly to that of the plaintiff, whereby intending not only to infringe the trademark but also to pass off the goods as that of the plaintiff as the two marks are also phonetically similar. The Court restrained the defendant from using the trademark `FEXIM' or any trademark deceptively similar to the trademark of the plaintiff `PHEXIN', any label/packaging material deceptively similar and containing the same pattern as that of the plaintiff.

If a party using the deceptively similar name only for a single shop and not spreading its business by use of that particular name then also that party could be stopped from using the trade name of other company. This is given in M/s Bikanervala v. M/s AggarwalBikanerwala [2] where the respondent was running a sweet shop in with the name of AGGARWAL BIKANERVALA and the plaintiff was using the name BIKANERVALA from 1981 and also got registered it in the year 1992. Hence they applied for permanent injunction over the use of the name AGGARWAL BIKANERWALA for the sweet shop by the defendant. Court held in favour of the plaintiff and stopped defendant from manufacturing, selling, offering for sale, advertising, directly or indirectly dealing in food articles for human consumption under the impugned trade mark/trade name/infringing artistic label 'AGGARWAL BIKANER WALA' or from using any trade mark/trade name/infringing artistic work containing the name/mark 'BIKANER WALA/BIKANERVALA' or any other name/mark/artistic work which is identical or deceptively similar to the plaintiff's trademark 'BIKANERVALA'.

If the trademark is not registered by any party but one party started using it before the other then first one would have the legal authority on that particular mark. As in the case ofDhariwal Industries Ltd. and Anr. v. M.S.S. Food Products [3] where appellants were using the brand name MALIKCHAND for their product and the respondents were using the name MANIKCHAND which is similar to the previous one and both parties have not registered their trademarks. Court held in this matter that even though plaintiff have not registered their trademark they are using it from long time back and hence court granted perpetual injunction against the respondents.

Even if a company is not doing business in country, but it is a well known company or well known goods, then also it would be entitled to get authority over its trademark. As given in case of N.R. Dongare v. Whirlpool Corp. Ltd. [4] where the defendants have failed to renew their trademark ‘WHIRLPOOL’ and in the mean time the plaintiffs have got registration of the same. In this case court said that though there was no sale in India, the reputation of the plaintiff company was traveling trans border to India as well through commercial publicity made in magazines which are available in or brought in India.

The “WHIRLPOOL” has acquired reputation and goodwill in this country and the same has become associated in the minds of the public. Even advertisement of trade mark without existence of goods in the mark is also to be considered as use of the trade mark. The magazines which contain the advertisement do have a circulation in the higher and upper middle income strata of Indian society. Therefore, the plaintiff acquired transborder reputation in respect of the trade mark “WHIRLPOOL” and has a right to protect the invasion thereof.

Cases of Passing Off;

Even if the goods are not same or similar to each other, then also no one can use the registered trademark of a company for any kind of goods which may result in the harm to the business and reputation of the company which is the owner of the trademark. In Honda Motors Co. Ltd. v. Mr. Charanjit Singh and Ors [5] defendant Company was using the trade name HONDA for ‘Pressure Cookers’ which they are manufacturing in India and even when their application for registration of this trademark had been rejected by the registrar they continued using it and again applied for registration and hence plaintiff has brought this plaint. Plaintiff is the well known company having presence all over the world in the field of Motor Cars, Motorcycles, Generators and other electronic appliances. They are doing business in India in association with the Siddharth Shriram Group with the name Honda Siel Cars India Ltd. Plaintiff has established that his business or goods has acquired the reputation and his trade name has become distinctive of his goods and the purchasing public at large associates the plaintiff's name with them. The use of trademark HONDA by respondents is creating deception or confusion in the minds of the public at large and such confusion is causing damage or injury to the business, reputation, goodwill and fair name of the plaintiff. Hence court has restricted the defendants from using the trademark HONDA in respect of pressure cookers or any goods or any other trade mark/marks, which are identical with and deceptively similar to the trade mark HONDA of the plaintiff and to do anything which amounts to passing off to the goods of the plaintiff.

In the case of Smithkline Beecham v. V.R. Bumtaria [6] the plaintiff applied for permanent injunction to restrain the defendant from infringing the trademark, passing off, damages, delivery etc. of its registered trademark ARIFLO, used in respect of the pharmaceutical preparations. Defendants were using the similar name ACIFLO for their product of the same drug in India. Plaintiffs were not doing business in India for the particular product and argued that since their advertisements are been published in medical journals hence they have a transborder reputation and defendants should be stopped to use the similar trademark which creating deception in customers.

Court said that mere publication of an advertisement in a journal cannot establish a trans-border reputation. Such reputation if any is confined to a particular class of people, i.e., the person subscribing to the said specialized journals and the same can’t be said to be extended to the general consumers. Thus any adverse effect on the firm in such a case can’t be amounted to the offence of “passing off”.

Though the dispute resulted in compromise where the defendant agreed and accepted the plaintiffs’ exclusive right on the use of mark i.e. ARIFLO in India and abroad and further agreed to not to manufacture pharmaceutical preparations under the mark ACIFLO or any other mark identical or similar to ARIFLO.

Trade Dress:

The literal meaning of Trade Dress is - the overall image of a product used in its marketing or sales that is composed of the nonfunctional elements of its design, packaging, or labeling (as colors, package shape, or symbols). That means there is a specific way of writing any product name, its unique background and other remarkable signs. The concept of trade dress has much importance in a country like India where one third of the population is still illiterate. Trade dress helps the illiterate people who cannot read the trademark on the product as well as the manufacturers to reach the people easily.

Delhi H.C. had dealt with this concept in a detailed manner in the case of Colgate Palmolive Company and Anr. v. Anchor Health and Beauty Care Pvt. Ltd. [7] where the plaintiffs have filed the case for the ‘passing off’ of trademark and the dispute was on the colour scheme and combination of colours in a significant manner. Colgate Company was the plaintiff and questioning the use of a mark on dental product which is the combination of ‘red’ and ‘white’ in proportion of 1/3:2/3 respectively and the way of writing the name of product was also in dispute. Plaintiffs were using the mark of particular fashion from 1951 and the respondents started using it in 1996. Plaintiffs have filed the application to stop the respondents from using the particular mark.

The plaintiffs showed to the court that the look of trade dress of the two articles, one manufactured by the plaintiff and another by the defendant from the point of view of not only unwary, illiterate customer/servants of the household but semi-literate also as the trademarks "Colgate" and "Anchor" are written in English language cannot be distinguished by ordinary customer. There is every likelihood of confusion as to the source on account of the similarity of substantial portion of the container having particular colour combination and also shape of the container. Such an action on the part of infringing party also has an element of unfair competition.

Court said in this matter that may be, no party can have monopoly over a particular colour but if there is substantial reproduction of the colour combination in the similar order either on the container or packing which over a period has been imprinted upon the minds of customers it certainly is liable to cause not only confusion but also dilution of distinctiveness of colour combination. Colour combination, get up, lay out and size of container is sort of trade dress which involves overall image of the product's features. There is a wide protection against imitation or deceptive similarities of trade dress as trade dress is the soul for identification of the goods as to its source and origin and as such is liable to cause confusion in the minds of unwary customers particularly those who have been using the product over a long period.

If a product having distinctive colour combination, style, shape and texture has been in the market for decades it got attached with the reputation and goodwill of the company which could be earned at huge cost.

In the present dispute if an illiterate servant or village folk goes to the shop with the instruction to bring Colgate Tooth Power having a container of particular shop with trade dress of colour combination of Red and White in 1/3 and 2/3 proportion he will not be in position to distinguish if he is handed over "Anchor" Tooth Powder contained in a container having the identical trade dress and colour combination of "Red and White” in that order and proportion. Confusion is much large as to source and origin as the difference in name will not make any difference to such a customer and the goods of the defendant can easily be passed off as goods of the plaintiff.

Court said that significance of trade dress and colour combination is so immense that in some cases even single colour has been taken to be a trademark to be protected from passing off action. Except where the colour cannot be protected as the blue colour is for the Ink and red colour is for the lipstick or similar cases. Court said that it is been established that the defendants are using the trade dress of plaintiffs for their containers and hence Court had allowed the application of plaintiffs and restrained defendants from using the colour combination of red and white in the disputed order on the container/packaging of its goods.

Conclusion:

By this discussion we can draw following inferences:

· Registered trademark is the property of the holding company and it is directly associated with the name, reputation, goodwill and quality of products of a company.

· A company can not use the trademark of another company.

· No one can use even the similar trademark which is creating deception or confusion for the customers.

· No one can use the trademark of a company, which is well known and having a transborder reputation, even if it is not registered in India.

· Mere advertisement in a particular journal does not create transborder reputation.

· Trade dress is also a part of trade mark and no one can use the specific writing style, definite colour combination and identifiable background for packaging and labeling a product.

· Mere a single colour can also be treated as a trade dress for a specific product.

Source : ,http://www.legalserviceindia.com/article/l226-Trademark-Infringement-&-Passing-Off.htm

Marks & Spencer’s use of AdWords is trade mark infringement

http://www.lexology.com/library/detail.aspx?g=16208385-ceb4-4d5b-8994-8e3877a5a82a

Five Things About Intellectual Property That a Startup Should Consider

Intellectual property rights (IPR) system traces its roots back to 3200 BC. Renaissance Northern Italy is thought to be the cradle of IP system. The first copyright was issued to a printing press invented in the 16th century while the first patent was issued in Florence in 15th century to Filippo Brunelleschi for a floating architectural crane. Trademarks are the oldest category of IPR.

Any organization that is planning its entry into the market should definitely keep IPR in mind. Because the benefits will not just make you richer but can far outweigh the other tangible benefits you get from your business.

Here are five points for a startup to keep in mind :

1. Single intellectual property right is enough to launch your venture

A strong single IP right can give an edge to your new venture and also makes your entry into the market comparatively easy. IP can build a fortress around the organization and protect it from competition. To leverage IP correctly, it is important to know the IP focus of an organization. For example, if you are a technology driven startup, then patents will play a major role besides copyright, trademark & industrial design. If the startup is in the business of movies, then copyright is the king. If the startup is related to games or animation then industrial design along with copyright will take prime position.

Google’s first patent, US6285999, filed on Jan 9, 1998 called Page Rank was a link analysis algorithm. The patent was assigned to Stanford University and not Google in the beginning, as this technology was developed by Sergey Brin and Larry Page when they were PhD students at Standford. Google had exclusive license rights on the patent from Stanford University. Later on the founders purchased the rights from the University for 1.8 million shares of Google in exchange of use of patent. Later in 2005 the University altogether sold the shares for $336 million. Both the institute (assignee) and students (inventors) rightfully exploited their IP rights to build today’s tech giant, Google. The Page Rank IP also holds a trademark protection – an example of a single invention being protected by two different types of IP.

2. DEVELOP YOUR IP PORTFOLIO

It would be a good idea for startups or any business, to align core competencies of business with their IP strategy. This helps to build a strong IP portfolio. Almost all patents of Google are in ‘computing, calculating and counting’ domain. Thus Google follows a very focused innovation and IP generation process.

For example: In the computing space, Google has registered a patent to detect events of interest in context of network traffic, registered as US7970934B1. In this case Google has registered the patent which forecasts the traffic that will come to the Google Search page to search information about any event of interest, like an earthquake. This helps them efficiently manage site traffic and improve user experience.

3. BE AWARE OF IPR OF OTHERS

It is advisable for startups to know the IPR of others to avoid infringement. Remember ‘law does not forgive ignorance’, so no point pleading ignorance in case of a lawsuit.

In October 2006 when Google acquired YouTube, organizations like Viacom Mediaset and the English Premier League filed lawsuits against YouTube for violation of copyright. Viacom said that more than 150,000 unauthorized clips of material owned by Viacom were viewed on YouTube. And Google had to payup for this unauthorized use of Viacom’s IP right.

4. OBSERVE YOUR COMPETITION

Besides an internal focus, it is desirable to keep an eye on your competitor’s IP development. Patent analytics and business analytics can help know the technology trend and market scenario of competitors.

Google keeps a close watch on what Yahoo!, Microsoft, eBay, Amazon, Facebook, Hulu and Washington Post among others are what they are doing. Known as competitive intelligence, Google tracks its competitor’s technology development closely to ensure they are not caught unawares. For example, when Google launched Google Docs it was in direct competition to Microsoft Office’s Word. This gave users the advantage to directly work on a word file online without have to download it to make any changes. This move by Google has impacted the need for users to have a licensed copy of MS Word on their devices to work.

5. COMPETE WITH YOURSELF

To grow, compete with yourself and develop new technologies or brands which will satisfy your customer. When Larry & Sergey founded Google in 1998, they started with their core product — search engine. Later they built the revolutionary email platform – Gmail, creating threat for Yahoo! and have now ventured into cloud based applications that threatens Microsoft.

The creations by Google are result of out-of-the-box thinking which resulted in disruptive innovations. This intellectual input by inventors at Google is rightly protected by IP regimes. And Google is able to commercialize these inventions appropriately and at the right time.

Source: Gouri Gargate, Yourstory. in

Agarwal and Company Law Offices LLP.

Indian perspective on Geographical Indication Intellectual Property

The Indian law of Geographical Indications is enshrined in the Geographical Indications of Goods (Registration and Protection) Act, 1999. This Act seeks to provide for the registration and protection of Geographical Indications relating to goods in India. The Act is administered by the Controller General of Patents, Designs and Trade Marks, who is the Registrar of Geographical Indications Registry. The rights granted under the Act, are operative in the whole of India.

What is a Geographical Indication?

A Geographical Indication is a sign used on goods that have a specific geographical origin and possess essential qualities that are due to that place of origin. It is an Indication used to identify agricultural, natural or manufactured goods from a definite territory which have a special quality or characteristics or reputation based upon the climatic or production characteristics unique to the location. A geographical indication conveys consumer that a product is produced in a certain place and has certain characteristics that are due to that place of production. For example, no produces of whisky can call it Scotch, unless it has been produced in Scotland.

Examples of geographical indications from India include DARJEELING tea, BASMATI rice, KANCHIPURAM Silk Saree, ALPHONSO Mango and KOHHLAPARI slippers. Other examples of geographical indications include TUSCANY olive oil in Italy, ROQUEFORT cheese in France, and IDAHO potatoes in the United States.

How Geographical Indication differs from Trade Mark ?

A Geographical Indication is different from Trademark. A Geographical Indication is used to identify goods having special characteristics originating from a definite territory whereas trademark identifies the source of the goods or services of one enterprise from those of others. Unlike Trade Marks which is proprietary in nature, with exclusive right on the owner to use the mark, a Geographical Indication is usually collectively owned by a Community, a group of producers or even by a Nation State.

Why does Geographical Indication need protection?

Geographical Indications denotes the origin and the quality of products which have acquired reputation and goodwill over time. False use of geographical indications by dishonest traders, for example "KANCHIPURAM" for sarees, which was not made in the Kanchipuram area of Tamil Nadu in India, is detrimental to purchasers and legitimate producers. Hence geographical indication needs protection.

Classification of Goods

Almost all jurisdictions including India follow International Classification system in which goods have been grouped into classes 1 to 34 for registration.

How rights conferred by registration

The registration of a geographical indication confers on the authorized users the exclusive right to use the geographical indication in relation to the goods in respect of which it is registered. The Registration offers better legal protection for an action for infringement.

Who Can Apply For Geographical Indication

Any association of persons, producers, organization or authority established by or under the law can apply. The applicant must represent the interests of the producers of the concerned goods.

Authorized User in relation to a Geographical Indication ?

A producer of goods can apply for registration as an Authorized User, with respect to a registered Geographical Indication. He should apply in writing in the prescribed form along with prescribed fee.

Procedure for Geographical Indications Applications

An application for registration of geographical indication shall be in prescribed Form (Form GI-1 for the registration of a Geographical Indication in Part A of the Register by an Indian applicant; Form GI-2 for a convention application; an application for goods falling in different classes by an Indian applicant in Form GI-3 and an application for registration of goods falling in different classes from a convention country in Form GI-4).

The application should include the various requirements and criteria for processing a geographical application as follows:

1.                  How the indication serves to designate the goods as a GI?

2.                  The Class of goods;

3.                  The territory;

4.                  The particulars of appearance;

5.                  Particulars of producers;

6.                  An affidavit of how the applicant claim to represent the interest;

7.                  The standard bench mark or other characteristics of the GI;

8.                  The particulars of special characteristics;

9.                  Textual description of the proposed boundary;

10.              The growth attributes in relation to the G.I. pertinent to the application;

11.              Certified copies of the map of the territory

12.              Special human skill involved, if any;

13.              Number of producers; and

14.              Particulars of inspection structures, if any, to regulate the use of GI.

Upon filing of the application accompanied by prescribed fees, a number will be alloted. The application would be examined on turn to check whether it meets the requirements of the GI Act and Rules. After issuance of the Examination Report submission would be considered. If no objections is raised it would be accepted and would be advertised in the Geographical Indications Journal. An opposition can be lodged within a maximum of four month period. If the opposition is dismissed, the application will proceed to registration in Part A of the Register.

After a geographical indication is registered any person claiming to be the producer of the registered geographical indication can file an application for registration as an authorized user in Part B of the Register.

Term of a geographical indications

The term of a geographical indications registration is for a period of ten years. The renewal is possible for further period of 10 years each. If a registered geographical indication is not renewed, it is liable to be removed from the register.

Remedies For Infringement

The Act also provides criminal remedies. First, the intentional falsification of a geographical indications will bear a prison sentence of at least six months. This may be extended to three years and be accompanied by a fine. Second, the police may conduct search and seizure operations without any warrant. In essence, unauthorized parties may not use geographical indications if such use is likely to mislead the public as to the true origin of the product

Agarwal and Company Law Offices LLP. 

Limitation Act - Time for Appeal

Law relating to limitation is incorporated in the Limitation Act 1963 which prescribes different periods of limitation for suits, petition or applications. The act applies to all civil proceedings and some special criminal proceedings which can be taken in the court of law unless its application is excluded by any enactment. The Act extends to whole of India except the state of Jammu and Kashmir. The statutes of limitation are based on the principles of public policy which diligence and to prevent oppression.

 

The Law of limitation bars the remedy in a court of law only when the period of limitation has expired, but it does not extinguish the right that it cannot be enforced by judicial process. Thus if a claim is satisfied outside the court of law after the expiry of period of limitation, that is not illegal.

 

The intention of the law of limitation is, not to give right where there is not one, but to interpose a bar after a certain period to a suit to enforce an existing right. The object is to compel litigants to be diligent in seeking remedies in court of law by prohibiting stale claims. It is to help the bona fide claimant and to prevent fraud being practiced by people upon innocent persons by keeping action hanging on them for a long time.

 

Computation of the period of Limitation

 

The Courts in India are bound by the specific provisions of the limitation Act and are not permitted to move outside the ambit of these provisions. The Act prescribed the period of limitation in Articles in schedule to the Act. In the articles of the schedule to the limitation Act. columns 1,2, and 3 must read together to give harmonious meaning and construction.

 

Bar of Limitation

 

Sec 3 of the Act provides that any suit, appeal or application if made beyond the prescribed period of limitation, it is the duty of the court not to proceed with such suits irrespective of the fact whether the plea of limitation has been setup in defence or not. The provision of sec 3 are mandatory. The court can suo  motu take note. The effect of sec 3 not to deprive the court of is jurisdiction. Therefore, decision of a court allowing a suit which had been instituted after the period prescribed is not vitiated for want of jurisdiction.

 

Extension of Time in Certain Cases

 

Doctrine of sufficient cause

 

Sec 5 allows the extension of prescribed period in certain cases on sufficient cause being shown for the delay. This is known as doctrine of “Sufficient cause” for condonation of delay which is embodied in sec 5 of the Limitation Act. 1963. Sec 5 provides that any application other than application under provision of order XXI of the code of civil procedure 1908 may admitted after the period of limitation if the appellant satisfies the court that he had sufficient cause for not preferring the appeal. However it must be a cause which is beyond the control of the party.

 

Person under legal disability

 

Section 6 is an enabling section to enable persons under disability to exercise their legal rights within a certain time. Section 7 supplements section 6,section 8 controls these section, which served as an exception  to sec 6 and 7. The combined effect of section 6 and 8 is that where the prescribed limit expires before the cessation of disability, for instance, before the attainment of majority, the minor will no doubt be entitled fresh period of limitation.

 

Computation of period of limitation:

i)  Section 12 to 24 deals with computation of period limitation. As per section 12 the day to be excluded in computing period is the day from which the period is to be reckoned and the time requisite for obtaining a copy of decree shall be excluded.

ii)  Time which leave to sue or appeal as a pauper is applied for also excluded.

iii)  The time which a suit or application stayed by an injunction and the continuance of the injunction and the time taken for obtaining sanction or consent.

Divorce by mutual consent

i) A separation of one year before filing the case please note that actual physical separation is not required, even if both parties are sleeping in the same bedroom they can be said to be seperated for the purposes of mutual consent, if they are not living together as husband and wife;

 

ii) A flawlessly drafted MoU (Memorandum of Understanding) that settles the terms on which you part away, people don’t understand the importance of this, this is extremely important so as to end the matters with a finality once and for all, there are no loose ends and make sure there is no litigation in future;

 

Once the above is done – you have to get drafted the Divorce petition that encapsulates the contents of your earlier MoU.

 

After Court

 

When you file your divorce by mutual consent petition – it comes up for hearing and your statements are recorded, then the court gives you a period of 6 months (basically to think over your decision) after which,  on recording of final statements divorce decree is passed.

 

Monetary Settlement/Maintenance/Alimony/Child Custody issues.

 

A Mutual Consent petition gives you the flexibility to come to your own terms with respect to the issue. If a full and final settlement is reached – the money can be paid before the court at the time of final hearing.

 

In all this procedure enables couples to part away amicably on a good note, without ruinous litigation, and without much expense.

Indian Contract Act, Non compete clause

A non-compete clause or a covenant not to compete is a term used in contracts under which the employee agrees to not pursue a similar profession, trade or business in competition against the employer. Apart from the regular employment agreements, such covenants are also at times included in the agreements relating to sale of goodwill of business or professional practice, employment exit and other exclusive dealings and service arrangements.

The Indian Contract Act, 1872, which provides a framework of rules and regulations, governing the formation and performance of a contract in India deals with the legality of such non-compete covenants. It stipulates that an agreement, which restrains anyone from carrying on a lawful profession, trade or business, is void to that extent. Under section 27 of the Indian Contract Act, 1872 agreements in restraint of trade are void.

Agreement in restraint of trade is defined as the one in which a party agrees with any other party to restrict his liberty in the present or the future to carry on a specified trade or profession with other persons not parties to the contract without the express permission of the latter party in such a manner as he chooses. Providing for restraint on employment in the employment contracts of the employees in the form of confidentiality requirement or in the form of restraint on employment with competitors has become a part of the corporate culture.

Section 27
Every agreement by which anyone is restrained from exercising a lawful profession or trade or business of any kind, is to that extent void.
Exception: One who sells goodwill of a business with a buyer to refrain from carrying on a similar business, within specified local limits so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein provided that such limits appear to the Court reasonable, regard being had to the nature of business.

Although the section states that all agreements in restraint of any profession, trade or business are void, the current trend as per various judicial pronouncements leads to the conclusion that reasonable restraint is permitted and does not render the contract void ab initio. Reasonableness of restraint depends upon various factors, and the restraint in order to prevent divulgence of trade secrets or business connections has to be reasonable in the interest of the parties to ensure adequate protection to the covenantee. The above section implies that to be valid an agreement in restraint of trade must be reasonable as between the parties and consistent with the interest of the public.

Therefore two terms need to be defined:
1. What is public policy?
2. What is “reasonable”?

PUBLIC POLICY

The concept of public policy is illusive, varying and uncertain. The term ‘Public Policy ’ is not capable of a precise definition and whatever tends to injustice of operation, restraint of liberty, commerce and natural or legal rights; whatever tends to the obstruction of justice or violation of statutes and whatever is against good morals can be said to be against public policy.

It has been held that the concept of public policy is capable of expansion and modification.[1]

The Supreme Court observed in in Gherulal Pathak v. Mahadeodas Maiya[2]
“Public policy is a vague and unsatisfactory term and calculated to lead to uncertainty and error and when applied to decision of legal rights it is capable of being understood in different senses. It is the province of the judge to expound this law only. They have become a part of recognized law, and we are therefore bound by them. There are several decisions of the courts which lays down a general rule as to what is an agreement opposed to public policy and what is not. These, though provide guidelines as to defining ‘public policy’ cannot be used as a sure shot rule”.

Agreements opposed to public policy:
There are several moral, legal, ethical constraints. Some case laws help to understand what an agreement in restraint of public policy is.
If an agreement is such that it tends to injure public interest or public welfare it is against public policy [3]
Where there is an agreement between the parties that a certain consideration should proceed from the accused person to the complainant in return for the promise of the complainant to discontinue the criminal proceedings is clearly a transaction as opposed to public policy[4]

Agreements Not Opposed to Public Policy:
A contract for manning, running, operating, repairing and maintenance on hire for three vehicles was entered into between parties. The contracts inter alia provided that the employer shall have the right to terminate the contract after expiry of one year without assigning reasons. It was held that such a stipulation was not unconscionable or opposed to public policy[5]

Hence using these guidelines courts can deduce what is public policy as it has not been appropriately defined in any case law.

WHAT IS REASONABLE?

As defined by the dictionary reasonable means – according to reason.
Hence whatever a reasonable man would do, using commonsense and knowledge, under the given circumstances, will account as reasonable. Therefore the test of reasonability depends on the facts and circumstances of each case.

 Where services are performed under an agreement that the remuneration shall be to the discretion of the employer, the question whether the employer has the right to determine whether any remuneration at all shall be paid, so that his decision is a condition precedent to any claim or merely has the right to fix the amount of the remuneration, is a question of construction and intention in each particular case.[6]

Reasonable restrictions can be placed in the following ways:

1. Distance: suitable restrictions can be placed on employee to not practice the same profession within a stipulated distance, the stipulation being reasonable.

2. Time limit: if there is a reasonable time provided in the clause then it will fall under reasonable restrictions.

3. Trade secrets: the employer can put reasonable restrictions on the letting out of trade secrets.

4. Goodwill: There is an exception under section 27 of the Indian Contract Act on the distribution of goodwill.

NON COMPETE CLAUSES UNENFORCEABLE IN INDIA

With the increase in cross-border trade and an enhanced competitive climate in India, confidentiality, non-compete, and non-solicitation agreements are becoming increasingly popular, especially in the IT and technology sectors. An increasing number of outsourcing and IT companies are including confidentiality, non-compete, and non-solicitation clauses in agreements with their employees, with terms ranging from a few months to several years after the employment relationship are terminated. The companies claim that such restrictions are necessary to protect their proprietary rights and their confidential information.

Indian courts have consistently refused to enforce post-termination non-compete clauses in employment contracts, viewing them as "restraint of trade" impermissible under Section 27 of the Indian Contract Act, 1872, and as void and against public policy because of their potential to deprive an individual of his or her fundamental right to earn a livelihood.

There are various case laws that will clear out the situation in India:

Supreme Court of India in Percept D' Mark (India) Pvt. Ltd v Zaheer Khan [7] observed that under Section 27 of the Act a restrictive covenant extending beyond the term of the contract is void and not enforceable. The court also noted that the doctrine of "restraint of trade" is not confined to contracts of employment only, but is also applicable to all other contracts with respect to obligations after the contractual relationship is terminated.

In a 2009 decision by the New Delhi High Court in Desiccant Rotors International Pvt Ltd v Bappaditya Sarkar & Anr [8] involved a senior marketing manager at a manufacturer of evaporative cooling components, products and systems. As part of his employment agreement with Desiccant, the manager agreed that for two years following the termination of his employment, he would be bound by a covenant with Desiccant that would require him to keep Desiccant's matters confidential, and that would prevent him from competing with Desiccant and soliciting Desiccant's customers, suppliers and employees. Expressly embodied in the employment agreement was an acknowledgment by the manager that he was dealing with confidential material of Desiccant, including: know-how, technology trade secrets, methods and processes, market sales, and lists of customers. After a few years of employment, the manager resigned and-notwithstanding the terms of his old employment agreement-within three months of his resignation joined a direct competitor of Desiccant as country manager in charge of marketing and started contacting customers and suppliers of Desiccant. In injunctive proceedings against the manager by Desiccant, the High Court reiterated the principles embodied in Section 27 of the Act and the individual's fundamental right to earn a living by practicing any trade or profession of his or her choice. Brushing aside any argument by Desiccant that the restrictive covenants were primarily designed to protect its confidential and proprietary information, the High Court ruled that in the clash between the attempt of employers to protect themselves from competition and the right of employees to seek employment wherever they choose, the right of livelihood of employees must prevail. However the High Court did allow an injunction against the manager prohibiting him from soliciting Desiccant's customers and suppliers to stand in effect.

Similarly, in a 2007 decision in V.F.S. Global Services Ltd. v. Mr. Suprit Roy [9]

The Bombay High Court held that a fully paid three-month "garden leave" agreement with a senior manager did not renew the employment contract and constituted a "restraint of trade" unenforceable by V.F.S. However, relief for breach of non-solicitation obligations was denied on the basis of vagueness of the relief claimed.

In Superintendence Company of India vs Krishan Murgai [10]

The Supreme Court held that a contract, which had for its object a restraint of trade, was prima facie void. The company, with its head office at Kolkata and branch office at New Delhi, carried on business as valuers and surveyors. It had established a reputation and goodwill in its business by developing its own techniques for quality testing and control and possessed trade secrets in the form of these techniques and clientele. Mr Murgai was employed as branch manager of the New Delhi office. One of clauses of the terms and conditions of employment placed him under a post-service restraint that he would neither serve any other competitive firm nor carry on business on his own in similar line for two years at the place of his last posting; and the restriction would come into operation after he left the company. When he was terminated from service, the employee started a business on similar lines. When the matter came for appeal, the Supreme Court held that under Section 27 of the Indian Contract Act, 1872, a service covenant extended beyond the termination of the service was void.

In Star India Pvt Ltd. V. Laxmiraj Seetharam Nayak [11],

The Bombay High Court held that an employer has right to terminate the contract of employment on the ground of misconduct; hence, it cannot be said that the employee had absolutely no right to resign from the employment on account of better prospects or other personal reasons. It was observed by the court that merely because for some time the employer might face some inconvenience, the employee concerned cannot be forced to come back for the pleasure of the employer or to satisfy the ego of the higher-ups of the contemplated competition in the market.

In Sandhya Organic Chemicals P.Ltd v. United Phosphorous [12],

The Gujarat High Court held that a service covenant extended beyond the termination of the service is void. It was held that an employee could not be restrained for all times to come to use his knowledge and experience which he gained during the course of employment either with the employer or with any other employer. It was also held that the principles laid down by the English Courts on common law and equity will not be applicable in view of Section 27 of the Indian Contract Act.

In Lalbhai Dalpatbhai and co. v. Chittaranjan Chandulal Pandya[13],

The Division Bench of the Gujarat High Court consolidated all the fundamental principles concerning the negative stipulation in the contract of service during the service period and after the service period. The Bench dealt with the problem with utmost clarity and great vision. In fact, this should be a guiding judgment on the point. While considering the freedom of contract and the freedom of occupation, they laid down the fundamental principle that the freedom of contract must yield to the freedom of occupation in public interest.” The Bench said that it must be seen whether the enforcement of the negative stipulation is “reasonably necessary for the protection of the legitimate interests of the employer. If it is not going to benefit the employer in any legitimate manner, the court would not injunct the employee from exercising his skill, training and knowledge merely because the employee has agreed to it.”

In M/S Gujarat Pottling Co.Ltd. & Ors vs The Coca Cola Co. & Ors on 4 August, 1995[14]

The Supreme Court exhaustively reviewed the law relating to the validity of the contracts containing a negative covenant in commercial agreements. In paragraph No. 14 of the agreement entered into in the year 1993 between the parties in Gujrat Bottling Company's case provided that the Bottler would not manufacture, bottle, sale deed or otherwise be connected with the products, beverages of any other brands or trademarks/trade names during the subsistence of the agreement including the period of one year notice of termination. The 1993 agreement between the parties in that case was construed by the Supreme Court to be an agreement of a grant of franchiser by Coca Cola as a franchiser to Gujarat Botting Co. (GBC) as a franchisee whereby the GBC had been permitted to manufacture, bottle and sell beverages covered by the trade marks in the area covered by the agreement. The Supreme Court was required to consider whether the negative stipulation contained in paragraph No. 14 of the 1993 agreement being in restraint of trade was void under provisions of section 27 of the Contract Act. The Supreme Court noted that in England in earlier times, all contracts in restraint of relaxed and it became a rule that a partial restraint might be good if reasonable although a general restraint was void. The distinction between the general and partial restraint was subsequently repudiated and the rule, in England, now is that restraints whether general of partial may be good if they are reasonable and any restraint of freedom of contract must be shown to be reasonable to be valid. The principle that agreement in restraint of trade is void is a common law principle applicable in England while it has a statutory recognition under section 27 of the Indian Contract Act, 1872. While construing the provisions of section 27 of the Contract Act, the High Courts in India have held that neither the test of reasonableness nor the principle that the restraint being partial or reasonable are applicable to a case governed by section 27 of the Contract Act, unless it falls within the exception. The Law Commission in its 13th report has recommended that the provision (section 27 of the Contract Act) should be suitably amended to allow such restrictions and all contracts in restraint of trade, general or partial as were reasonable in the interest of the parties as well as public. No action is, however, been taken by the Parliament on the said recommendations (See paragraph No. 23).

However the court has upheld the non compete principle where is it reasonable:

In the case The Supreme Court of India in Niranjan Shankar Golikari v. The Century Spinning and Manufacturing Company Ltd [15]. observed that restraints or negative covenants in the appointment or contract may be valid if they are reasonable. A restraint upon freedom of contract must be shown to be reasonably necessary for the purpose of freedom of trade. The court held that a person may be restrained from carrying on his trade by reason of an agreement voluntarily entered into by him with that object. In such a case the general principle of freedom of trade must be applied with due regard to the principle that public policy requires the utmost freedom to the competent parties to enter into a contract and that it is public policy to allow a trader to dispose of his business and to afford to an employer an unrestricted choice of able assistance and the opportunity to instruct them in his trade and its secrets without fear of their becoming his competitors. Where an agreement is challenged on the ground of its being in restraint of trade, the onus is upon the party supporting the contract to show that the restraint is reasonably necessary to protect his interests. Once, this onus is discharged by him, the onus of showing that the restrain is nevertheless injurious to the public is upon the party attacking the contract.

Hence the non-compete covenants used in agreements can be categorized into in term and post term covenants. In an employment contract, the basic interests of the employer which are required to be protected include trade secrets and business connections and other such confidential information. In case of restraints in contracts of employment the nature of business and employment is relevant in assessing the reasonableness of restraints. An employee owes a duty to the employer to not disclose to others or use to his own advantage the trade secrets or confidential information which he had access to during the course of employment and he could be restrained from or sued for divulging or utilizing any such information in his new employment. But once again, he cannot be prevented from taking up the employment. Also, the employer cannot prevent the use of employee’s knowledge, skill or experience even if the same is acquired during the course of employment. Restrictive covenants are different in cases where the restriction is to apply during the period after termination of the contract than in those cases where it is to operate during the period of the contract.

Negative covenants operative during the period of contract of employment when the employee is bound to serve the employer exclusively are generally not regarded as restraint of trade and do not fall under Section 27 of the Indian Contract Act,1872. A negative covenant, one that the employee would not engage himself in a trade or business or would not get employment under any other employer for whom he/she would perform similar or substantially similar duties, is not a restraint of trade unless the contract is unconscionable or excessively harsh or unreasonable or one sided

CONCLUSION

It is well established by the various case laws decided in the courts of India that ‘non compete’ clauses that extend after the termination of employment are not enforceable in India. It is stated clearly in section 27 of the Indian Contract Act, 1872 that agreements in restraint of trade are void. In the garb of confidentiality, an employer cannot be allowed to perpetuate forced employment, as it is hit by Section 27.

Even though these clauses are valid in foreign countries, the laws and judicial interpretations of other countries will hardly have any effect on Indian courts if the statutory laws of this country are unambiguous. Post term restrictive covenants have been held invalid through various judicial pronouncements. An employer is not entitled to protect himself against competition on the part of an employee after the employment has ceased. However, a purchaser of a business is entitled to protect himself against competition per se on the part of the vendor and it has been upheld that a employer has no legitimate interest in preventing an employee after he/she leaves his service from entering the service of a competitor merely on the grounds that the employee has started working with a competitor, unless the same leads to misuse or an unauthorized disclosure of confidential information, which has been provided to the employee during his course of employment

Article 21 of the Constitution of India guarantees the live to livelihood and since it is a fundamental right it is held to be inviolable. This makes the enforcing of non compete clauses in India even more of a difficult task.

[1]P.Rathinam v. Union of India, AIR 1994 SC 1844 (1994) 3 SCC 394
[2]AIR 1959 SC 781: 1959 Supp(2)SCR 406
[3]RattanChand Hira Chand v. Aksar Nawaz Jung , (1991) 3 SCC 67
[4]Ouseph Poulo v. Catholic Union Bank ltd AIR 1965 SC 166: (1964) 7 SCR 745
[5]Oil and Natural Gas Corp. Ltd. V. Streamline Shipping Co., AIR 2002 Bom 420 (DB)
[6]S.Ranjan v. Indian Union AIR 1966 Mad 235: 78 Mad LW 636 (DB)
[7]AIR 2006 SC 3426
[8]I.A. No.5455/2008, I.A. No.5454/2008 & I.A. No.5453/2008 in CS(OS) No.337/2008
[9]2008(2)Bom CR 446, 2007(2) CTLJ 423 Bom
[10]1980 AIR 1717, 1980 SCR(3)1278
[11]2003(3) Bom CR 563, 2003(3)MhLj 726
[12]AIR 1997 Guj 177
[13]AIR 1966 Guj 189, (1966) GLR 493
[14]1995 AIR 2372, 1995 SCC (5) 545
[15]1967 AIR 1098, 1967 SCR (2)378