Copyright vs Design: Supreme Court Establishes Two-Pronged Test Under S. 15(2) Copyright Act to Determine Protection for Industrial Drawings - 2025-04-15

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Supreme Court Sets Two-Pronged Test to Resolve Copyright vs. Design Overlap

New Delhi: In a landmark ruling clarifying the complex interplay between copyright and design law, the Supreme Court has established a definitive two-pronged test to determine whether an artistic work industrially applied to an article loses its copyright protection. A bench led by Justice Surya Kant held that the question of whether an engineering drawing qualifies as a 'design' under the Designs Act, 2000, is a mixed question of law and fact that cannot be summarily dismissed at the preliminary stage under Order VII Rule 11 of the Civil Procedure Code ( CPC ).

The Court dismissed an appeal filed by Cryogas Equipment Pvt. Ltd. and upheld the Gujarat High Court's decision to allow a copyright infringement suit filed by Inox India Ltd. to proceed to trial.

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Background of the Dispute

The legal battle began when Inox India Ltd. (Inox) filed a suit against Cryogas Equipment Pvt. Ltd. ( Cryogas ) and LNG Express India Pvt. Ltd. (LNG Express), alleging infringement of its intellectual property. Inox claimed copyright over its "Proprietary Engineering Drawings" and associated "Literary Works" used in manufacturing internal components for Cryogenic Storage Tanks. It sought a permanent injunction and damages amounting to ₹2 Crores.

In response, Cryogas and LNG Express filed an application under Order VII Rule 11 of the CPC , arguing for the suit's dismissal. They contended that Inox's engineering drawings were 'designs' capable of registration under the Designs Act, 2000. Since Inox had allegedly produced more than 50 units using these drawings—an assertion based on Inox’s own claim of generating ₹122 crores in revenue—they argued that, as per Section 15 (2) of the Copyright Act, 1957, any copyright in the unregistered design had ceased to exist.

The case saw a prolonged legal volley, with the Commercial Court twice rejecting Inox’s plaint, and the Gujarat High Court twice setting aside those orders, insisting that the matter required a full trial.

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Key Arguments

Appellants' Contentions ( Cryogas & LNG Express): * The suit is barred by Section 15 (2) of the Copyright Act, as the engineering drawings are registrable 'designs'. * Once a design capable of registration is applied to an article and reproduced more than 50 times through an industrial process, it loses copyright protection. * Inox's claim of ₹122 crores in revenue implies the production of more than 50 units, triggering the bar under Section 15 (2). * The legislative intent is to protect industrial designs under the Designs Act for a limited period, not under the perpetual protection of the Copyright Act.

Respondent's Contentions (Inox): * The suit covers two distinct IPs: the 'Proprietary Engineering Drawings' (an artistic work) and the 'Literary Works' (processes and descriptions), which must be assessed independently. * The engineering drawings are not 'designs' because they relate to internal, functional components, lack visual appeal, and fall under the exclusion for "mere mechanical device" in the Designs Act. * Determining whether a work is a 'design' capable of registration involves mixed questions of law and fact, which cannot be decided without a trial. * A plaint cannot be partially rejected, and since claims of infringement of literary work and confidential information were also raised, the entire suit must proceed.

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Supreme Court Lays Down a Definitive Test

Addressing the "abstruse nature of the underlying dispute," the Supreme Court undertook a comprehensive analysis to resolve the conflict between the two statutes. The Court formulated a two-pronged approach for determining if a work falls under the limitation of Section 15 (2) of the Copyright Act:

Artistic Work vs. Design Analysis: First, determine if the work is a pure 'artistic work' protected under the Copyright Act or a 'design' derived from it and subjected to an industrial process. The Court clarified that the original artistic work does not lose copyright protection merely because a design is derived from it for industrial application.

Functional Utility Test: If the work does not qualify for copyright protection, the 'functional utility' test must be applied. This test assesses whether the design's primary purpose is functional rather than aesthetic. If the features are dictated solely by function, it may not qualify for protection under the Designs Act, which requires that the features "appeal to and are judged solely by the eye."

The judgment emphasized that this two-step inquiry is necessary to harmonize the two statutes and ensure that the rights granted under each regime serve their intended purpose without encroaching on the other.

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Plaint Cannot Be Rejected at the Threshold

Applying this framework to the case, the Supreme Court concurred with the High Court's reasoning. It held that the Commercial Court had erred in deciding complex factual and legal questions at a preliminary stage.

The Court observed: > "We are in complete agreement with the reasoning of the High Court that the question as to whether the original artistic work would fall within the meaning of ‘design’ under the Designs Act cannot be answered while deciding an application under Order VII Rule 11 of the CPC . This stage would involve only a prima facie inquiry as to the disclosure of cause of action in the plaint. The question pertaining to ascertaining the true nature of the ‘Proprietary Engineering Drawings’ involves a mixed question of law and fact and could not have been decided by the Commercial Court at a preliminary stage..."

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Final Decision and Directions

The Supreme Court dismissed the appeals and upheld the High Court's order, ensuring the suit will proceed to trial. It issued the following directions: 1. The Commercial Court must decide on Inox's pending application for an interim injunction within two months. 2. The Commercial Court must conduct a full trial and decide the case, applying the newly laid down test, within one year, noting that "significant judicial time" has already been wasted.