Court frowns upon GE sidestepping Insolvency Process to bring Copyright Infringement Claim
This case brings about some interesting takeaways on the questions of facts, issues, and jurisdiction in the context of copyright infringement by a company currently undergoing insolvency process. The ruling clarifies that (a) a corporate debtor that is subject of insolvency proceedings, the infringement of intellectual assets by it is to be determined by National Company Law Tribunal (NCLT) empowered by the Insolvency and Bankruptcy Code (IBC) to deal with the issues exclusively (b) The jurisdiction of a civil court in such cases is barred (c) Copyright assignment must be a signed and written document to claim rights over the work (d) fair use exception under the Copyright Act is only applicable to private and personal use and does not apply to a commercial activity.
- The parties in the suit are GE Power India Limited (GE), Plaintiff and NHPC Limited (NHPC), Defendant.
- GE claims Alstom India Ltd. (Alstom) is its predecessor company.
- GE alleged copyright infringement of drawing and documents that were used and shared in confidence with NHPC for Hydro Electric project, Teesta VI (Teesta VI project) by Lanco Teesta Hydropower Limited (LTHPL).
- Lanco Infratech Limited (LIL) and Lanco Teesta Hydropower Limited (LTHPL) are part of the Lanco Group of Companies. LTHPL is a Special Purpose Vehicle (SPV) company of Lanco Group.
- The Teesta VI Project was awarded to LTHPL. Alstom entered into an agreement with LIL for supplying engineering drawings covered by the copyrights owned by Alstom. The drawings and documents provided by Alstom to LIL were used in Teesta VI Project subject to the copyright vesting with Alstom.
- LIL went into liquidation, and insolvency proceeding was commenced against it. Thereafter, NCLT accepted the resolution plan and NHPC Limited (NHPC), Defendant acquired the Teesta VI Project from LTHPL.
- NHPC issued an open tender publishing and disclosing six drawings alleged by GE to be its copyrighted and highly confidential. GE aggrieved by NHPC intention to hand over all drawings to the successful bidder has brought this suit.
In the suit, GE has alleged violation of its copyright in the six drawings and the requirement to maintain confidentially being breached by NHPC.
- NHPC could not have used or publicized the drawings and data without a license or explicit permission of GE.
- NHPC published the drawings and deleted the identity of the owner and the disclaimer on the drawings without GE permission.
- NHPC had published the drawings and data on its official website and the website of Central Public Procurement Portal (CPPP), an interactive website that permits submission of the bid online through their portal. At least two of the companies have accessed the website from Delhi and have raised queries before submitting the bid.
- Listing of the said drawings and data on the worldwide web page is causing irreparable harm to GE, and NHPC is liable to immediately pull down the said drawings and data from its website.
- That the Hon’ble Court has no territorial jurisdiction to try the suit as neither the Plaintiff nor the Defendant reside or work for gain within the territorial jurisdiction of this Court.
- That uploading the tender on the website is for information purposes and not specifically targeting Delhi users.
- NHPC referred to provisions of Insolvency and bankruptcy code (IBC), contended that suit arising out of or concerning the corporate debtors undergoing insolvency resolution process can be decided only by the NCLT and jurisdiction of the civil Court is barred.
- GE failed to plead how the copyright owned by Alstom vested in GE. In the absence of supporting proof, GE cannot claim any copyright in the drawings.
- NHPC took the plea of fair dealing permitted under section 52(1)(a) of the Copyright Act.
Court observation and decision:
The Court, after hearing the parties’ arguments held:
- The copies of GE’s work and putting the same on the online portal and circulating the same to the public, including the public in Delhi, would give rise to cause of action in Delhi. The Court observed that in a suit alleging infringement of copyright, the cause of action would arise in the forum state where the infringement of the copyright would take place. Thus, NHPC contention on territorial jurisdiction was rejected by the Court
- The Court clarified the fair dealing exception is only available for personal and private use and not for commercial use.
- The Court rejected GE’s plea and held that no prima facie case could be made out in the absence of any corroborating evidence of transfer of copyright between parties. The Court noted GE’s plea that the drawings and data in its favor were given to LIL, and it could not have without the permission of GE passed on the same to LTHPL or NHPC. The Court held that the suit is not maintainable without making LIL and LTHPL as necessary parties.
- The Court referring to provisions of IBC held that it did not have jurisdiction to try the present suit. IBC creates a bar on the jurisdiction of a civil court in respect of any matter or question of law or fact concerning the insolvency resolution, including contracts creating or transferring such Intellectual Property Rights had to be determined by the NCLT or National Company Law Appellate Tribunal (NCLAT). The Court held that jurisdiction vested in NCLT is of wide ambit, and any question of law or fact concerning the insolvency resolution has to be determined by the NCLT.
The Court thus dismissed the suit as not maintainable given the specific provisions of Insolvency and Bankruptcy Code. The Court also observed that GE purposely did not make LIL and LTHPL as a party to the suit as they knew both companies were undergoing insolvency resolution process and it would have acted as a bar to their claim.