Cryogas Equipment Pvt. Ltd. v. Inox India Ltd.

Citation: 2025 (4) KLR (SC) 67 : 2025 INSC 483
Court: Supreme Court of India
Judges: Surya Kant, J.; Nongmeikapam Kotiswar Singh, J.
Date of Judgment: 15.04.2025
Case Nos.: Civil Appeal No. ____ / 2025 (Arising out of SLP (C.) No. 28062 / 2024); Civil Appeal No. ____ / 2025 (Arising out of SLP (C.) No. 28017 / 2024)
Parties : Cryogas Equipment Private Limited v. Inox India Limited and Others

Copyright Act, 1957 – Section 15(2) – Designs Act, 2000 – Section 2(d) – Distinction between Artistic Work and Design – Parameters for Classification.

Supreme Court formulated a two-pronged test to determine whether a work falls under Copyright Act or Designs Act: (1) Assess if the work is an “artistic work” under Section 2(c) of Copyright Act or a “design” derived from it and industrially applied per Section 15(2); (2) Apply “functional utility” test to evaluate dominant purpose for Designs Act eligibility. Proprietary Engineering Drawings’ classification as artistic work or design requires trial, involving mixed questions of law and fact. ([Paras 60, 67-69])

Code of Civil Procedure, 1908 – Order VII Rule 11 – Rejection of Plaint.

High Court’s rejection of application under Order VII Rule 11 upheld. Commercial Court erred in summarily rejecting plaint by assuming Proprietary Engineering Drawings were “designs” under Designs Act without evidence. Suit’s claims for Literary Works and confidential information further necessitate trial, as plaint cannot be partially rejected. ([Paras 66-68])

Interim Injunction and Trial Directions.

Commercial Court directed to decide interim injunction application within two months and conduct trial to assess nature of Proprietary Engineering Drawings and other IP claims within one year, applying formulated test. ([Para 70])

Held: Appeals dismissed. High Court’s restoration of suit affirmed, ensuring trial to resolve copyright infringement and related IP disputes concerning LNG Semi-trailers’ Proprietary Engineering Drawings and Literary Works.Cases Referred: Microfibres Inc v. Girdhar (Delhi HC); Star Athletica LLC v. Varsity Brands Inc (US SC); Amp v. Utilux (House of Lords).

Table of Contents

Facts

Inox India Limited filed a Trademark Suit (No. 3/2019) in the Commercial Court at Vadodara against Cryogas Equipment Private Limited and LNG Express India Private Limited, alleging copyright infringement of Proprietary Engineering Drawings and Literary Works related to LNG Semi-trailers. Inox sought declarations of infringement, permanent injunctions, surrender of infringing materials, and damages of Rs. 2 Crores. LNG Express moved to reject the suit under Order VII Rule 11 of the CPC, arguing that the drawings were “designs” under the Designs Act, 2000, and not protected under the Copyright Act, 1957, due to industrial reproduction exceeding fifty times. The Commercial Court allowed LNG Express’s application, rejecting the plaint. The Gujarat High Court set aside this order on 22.10.2024, restoring the suit and directing reconsideration of Inox’s interim injunction application. Cryogas and LNG Express appealed to the Supreme Court.

Issues

What are the parameters for determining whether a work falls under Section 15(2) of the Copyright Act, classifying it as a “design” under Section 2(d) of the Designs Act?
Did the High Court err in rejecting the application under Order VII Rule 11 of the CPC?

Arguments

Appellants (Cryogas and LNG Express)

The Proprietary Engineering Drawings are “designs” under the Designs Act, capable of registration, and lose Copyright Act protection under Section 15(2) if reproduced industrially more than fifty times.
Inox’s revenue of Rs. 122 Crores implies industrial production beyond the fifty-unit threshold.
The drawings lack originality, adhering to international standards (e.g., ASME, PED), and serve functional purposes, not qualifying as “artistic works.”
Inox’s claim of confidential information theft is not actionable in a Commercial Court, which handles IP disputes.

Respondents (Inox)

The Proprietary Engineering Drawings and Literary Works are distinct “artistic works” under Section 2(c) of the Copyright Act, not registrable as designs due to their functional nature and lack of visual appeal.
Section 15(2) does not apply as the drawings pertain to internal components, excluded from the Designs Act’s definition.
The suit includes claims for Literary Works and confidential information, which cannot be summarily rejected under Order VII Rule 11.
Determining the drawings’ nature requires a trial, as it involves mixed questions of law and fact.

Judgment

The Supreme Court dismissed the appeals, upholding the High Court’s decision to reject the Order VII Rule 11 application. Key findings include:

Issue 1: Parameters for Section 15(2) of the Copyright Act

Statutory Framework: The Copyright Act protects “artistic works” (Section 2(c)), while the Designs Act protects “designs” (Section 2(d)) with visual appeal applied industrially. Section 15(2) of the Copyright Act limits copyright protection for unregistered designs reproduced industrially more than fifty times.
Judicial Precedents: Indian courts (e.g., Microfibres Inc v. Girdhar) distinguish between artistic works and designs based on intent and industrial application. The “functional utility” test, adopted from English law (Amp v. Utilux), assesses whether a work’s primary purpose is functional or aesthetic.
US Approach: The “conceptual separability” test (Star Athletica LLC v. Varsity Brands Inc) separates artistic features from utilitarian functions, aligning with India’s functional utility test.
International Principles: TRIPS and other treaties allow national discretion but recognize functional utility as a criterion for design protection.
Test Formulated: A two-pronged approach to determine protection:
1. Assess if the work is an “artistic work” under the Copyright Act or a “design” derived from it and industrially applied (Section 15(2)).
2. Apply the “functional utility” test to evaluate the work’s dominant purpose for Designs Act eligibility.

Issue 2: High Court’s Rejection of Order VII Rule 11 Application

The High Court correctly held that determining whether the Proprietary Engineering Drawings are “artistic works” or “designs” involves mixed questions of law and fact, unsuitable for summary rejection under Order VII Rule 11.
The Commercial Court erred in assuming the drawings were designs without evidence, misapplying Section 15(2).
The suit The suit’s additional claims (Literary Works, confidential information) further justify a trial, as a plaint cannot be partially rejected.
The Supreme Court directed the Commercial Court to:
- Decide Inox’s interim injunction application within two months.
- Conduct a trial using the formulated test to assess the drawings and other IP claims within one year.

Conclusion

The Supreme Court clarified the interplay between the Copyright Act and Designs Act, establishing a clear test for distinguishing artistic works from designs. The High Court’s restoration of the suit was upheld, ensuring a trial to resolve the complex IP disputes.

Multiple Choice Questions (MCQs)

What was the primary legal issue addressed by the Supreme Court in Cryogas Equipment Pvt. Ltd. v. Inox India Ltd.?
a) Determination of trademark infringement
b) Classification of Proprietary Engineering Drawings as “artistic work” or “design”
c) Enforcement of patent rights
d) Breach of contract disputes Answer: b) Classification of Proprietary Engineering Drawings as “artistic work” or “design”
Explanation: The Supreme Court focused on distinguishing between “artistic works” under the Copyright Act and “designs” under the Designs Act, particularly under Section 15(2) of the Copyright Act. ([Para 7])
Under Section 15(2) of the Copyright Act, when does copyright protection cease for an unregistered design?
a) When the design is registered under the Designs Act
b) When the design is reproduced more than 50 times by an industrial process
c) When the design lacks visual appeal
d) When the design is published in India Answer: b) When the design is reproduced more than 50 times by an industrial process
Explanation: Section 15(2) states that copyright in an unregistered design capable of registration under the Designs Act ceases if it is applied to an article and reproduced more than 50 times industrially. ([Para 15])
What test did the Supreme Court formulate to determine whether a work qualifies as a “design” under the Designs Act?
a) Aesthetic Appeal Test
b) Two-Pronged Test (Artistic Work Assessment and Functional Utility)
c) Originality Test
d) Marketability Test Answer: b) Two-Pronged Test (Artistic Work Assessment and Functional Utility)
Explanation: The Court outlined a two-pronged approach: (1) Assess if the work is an “artistic work” or a “design” industrially applied per Section 15(2); (2) Apply the “functional utility” test to determine the dominant purpose for Designs Act eligibility. ([Para 60])
Why did the Supreme Court uphold the High Court’s rejection of the Order VII Rule 11 application?
a) The plaint lacked a cause of action
b) The issue involved mixed questions of law and fact requiring a trial
c) The Commercial Court lacked jurisdiction
d) The suit was time-barred Answer: b) The issue involved mixed questions of law and fact requiring a trial
Explanation: The Court agreed with the High Court that determining the nature of the Proprietary Engineering Drawings required a trial, as it involved complex legal and factual issues unsuitable for summary rejection. ([Paras 67-68])
What additional claims in Inox’s suit prevented partial rejection of the plaint?
a) Patent infringement and trademark violation
b) Literary Works and confidential information
c) Breach of fiduciary duty
d) Unfair trade practices Answer: b) Literary Works and confidential information
Explanation: The suit included claims for Literary Works and confidential information, which could not be summarily rejected, justifying a full trial. ([Para 66(i)])
Which international treaty was cited by the Supreme Court to support the use of the functional utility test?
a) Paris Convention, 1883
b) Berne Convention, 1886
c) TRIPS Agreement, 1995
d) WIPO Copyright Treaty, 1996 Answer: c) TRIPS Agreement, 1995
Explanation: The Court referenced TRIPS Articles 25 and 26, which recognize the functional utility test to exclude designs based on technical considerations. ([Paras 51-52])
What was the Supreme Court’s direction to the Commercial Court regarding the interim injunction?
a) Dismiss the application immediately
b) Decide within two months
c) Defer until the trial concludes
d) Refer to arbitration Answer: b) Decide within two months
Explanation: The Court directed the Commercial Court to decide Inox’s interim injunction application within two months. ([Para 70(ii)])
Which case was extensively relied upon by the Supreme Court to clarify the distinction between artistic works and designs?
a) Star Athletica LLC v. Varsity Brands Inc
b) Microfibres Inc v. Girdhar
c) Amp v. Utilux
d) Bharat Glass Tube Ltd. v. Gopal Glass Works Ltd. Answer: b) Microfibres Inc v. Girdhar
Explanation: The Delhi High Court’s decision in Microfibres was frequently cited to distinguish between artistic works and designs, particularly regarding industrial application. ([Paras 22-28])

Frequently Asked Questions (FAQs)

What was the core dispute in Cryogas Equipment Pvt. Ltd. v. Inox India Ltd.?
The dispute centered on whether Inox India Limited’s Proprietary Engineering Drawings and Literary Works for LNG Semi-trailers were protected as “artistic works” under the Copyright Act or constituted “designs” under the Designs Act, and whether the suit was maintainable given the industrial reproduction of the drawings. ([Para 4])
Why did LNG Express seek to reject Inox’s plaint under Order VII Rule 11?
LNG Express argued that the Proprietary Engineering Drawings were “designs” under the Designs Act, not protected under the Copyright Act due to industrial reproduction exceeding 50 times, as per Section 15(2), rendering the suit non-maintainable. ([Para 4.4])
How does Section 15(2) of the Copyright Act affect copyright protection?
Section 15(2) provides that copyright in an unregistered design capable of registration under the Designs Act ceases if the design is applied to an article and reproduced more than 50 times by an industrial process. ([Para 15])
What is the “functional utility” test, and how was it applied in this case?
The functional utility test assesses whether a work’s primary purpose is functional or aesthetic. The Supreme Court directed the Commercial Court to apply this test to determine if the Proprietary Engineering Drawings qualified as designs under the Designs Act. ([Paras 59-60])
Why was the Commercial Court’s rejection of the plaint overturned?
The Commercial Court erroneously assumed the drawings were designs without evidence, ignoring the suit’s claims for Literary Works and confidential information. The High Court and Supreme Court held that these issues required a trial. ([Paras 66-68])
What role did international jurisprudence play in the Supreme Court’s decision?
The Court drew on US cases (Star Athletica for conceptual separability) and English cases (Amp v. Utilux for functional utility), alongside TRIPS provisions, to formulate a test aligning with global IP standards. ([Paras 40-47, 51-52])
What were the Supreme Court’s directions to the Commercial Court?
The Court directed the Commercial Court to: (1) Decide the interim injunction application within two months; (2) Conduct a trial within one year to assess the nature of the Proprietary Engineering Drawings and other IP claims using the two-pronged test. ([Para 70])
Can a plaint be partially rejected under Order VII Rule 11?
No, a plaint cannot be partially rejected. If some claims (e.g., Literary Works, confidential information) disclose a cause of action, the entire suit must proceed to trial. ([Para 66(i)])
How does the Supreme Court’s test harmonize the Copyright Act and Designs Act?
The two-pronged test ensures that “artistic works” retain copyright protection unless industrially applied as designs, which are then subject to Designs Act registration and Section 15(2) limitations, preventing overlap. ([Paras 57-61])
What precedent did the Supreme Court rely on to clarify the scope of artistic works?
The Court relied on Microfibres Inc v. Girdhar (Delhi HC), which clarified that artistic works have a broad scope but lose copyright protection when industrially applied beyond 50 times unless registered as designs. ([Paras 22-28])

Referred Cases

Shri Mukund Bhavan Trust and Others v. Shrimant Chhatrapati Udayan Raje Pratapsinh Bhonsle

Cited by the appellants to support the contention that Inox’s evasive drafting in the plaint could not create a valid cause of action. ([Para 5(f)])

Microfibres Inc v. Girdhar (Delhi High Court, Single Judge)

Referred to as Microfibres I, this case addressed the distinction between artistic works under the Copyright Act and designs under the Designs Act, denying copyright protection for fabric patterns intended for industrial use. ([Paras 22-23])

Microfibres Inc v. Girdhar and Co (Delhi High Court, Division Bench)

Referred to as Microfibres II, this case affirmed Microfibres I and elaborated on the scope of artistic works, clarifying that copyright protection ceases for designs applied industrially beyond 50 times if unregistered. Extensively relied upon to formulate the test for distinguishing artistic works and designs. ([Paras 27-28, 66(c)])

Dart Industries Inc and Another v. Techno Plast and Others (Delhi High Court)

Cited for holding that no copyright protection subsists once a design is registered under the Designs Act, particularly in the context of product drawings for Tupperware products. ([Para 24])

Mattel, Inc v. Jayant Agarwalla (Delhi High Court)

Referred to for denying interim injunction for a board game design reproduced industrially without registration under the Designs Act, following Microfibres I. ([Para 26])

Pranda Jewelry Pvt. Ltd. v. Aarya 24 KT (Bombay High Court)

Noted as following the Microfibres II approach in distinguishing between artistic works and designs. ([Para 29])

Fun World and Resorts (India) Pvt. Ltd. v. Nimil KK (Kerala High Court)

Noted as following the Microfibres II approach in distinguishing between artistic works and designs. ([Para 29])

Bharat Glass Tube Ltd. v. Gopal Glass Works Ltd. (Supreme Court of India)

Cited to explain the purpose of the Designs Act, emphasizing protection of original designs for a limited period to benefit creators. ([Para 30])

Amp v. Utilux (House of Lords, UK)

Referred to for establishing the “functional utility” test, distinguishing designs with visual appeal from those solely functional, influencing Indian jurisprudence. ([Para 32])

Interlego A.G v. Tyco Industries Inc and Others (Judicial Committee of the Privy Council, UK)

Cited for applying the functional utility test under the English Registered Designs Act, 1949, to distinguish aesthetic from functional features. ([Para 33])

Smithkline Beecham Plc. v. Hindustan Lever Ltd. (Delhi High Court)

Referred to for applying the functional utility test to deny design protection for a toothbrush design primarily functional in purpose. ([Para 34])

Tractors and Farm Equipment Ltd. v. Standard Combines Pvt. Ltd. (Madras High Court)

Cited for applying the functional utility test to assess whether tractor parts were functional or aesthetic, holding that such issues required a trial. ([Para 35])

Mohan Lal v. Sona Paint and Hardwares (Delhi High Court, Full Bench)

Noted for reaffirming the Smithkline decision on the functional utility test in the context of mirror frame designs. ([Para 36])

Whirlpool of India Ltd. v. Videocon Industries Ltd. (Bombay High Court)

Referred to for commenting on the functional utility test, suggesting that functionality is irrelevant if the function can be performed by another shape. ([Para 37])

Photoquip India Ltd. v. Delhi Photo Store (Bombay High Court)

Cited for adopting a conjunctive approach, interpreting Section 15(2) of the Copyright Act with the functional utility test, holding that functional drawings are not designs but may qualify as artistic works. ([Para 38])

TTK Prestige Ltd. v. KCM Appliances Pvt. Ltd. (Delhi High Court)

Noted for affirming the continued relevance of the functional utility test in determining design protection. ([Para 39])

Mazer v. Stein (US Supreme Court)

Referred to for laying the foundation of the “conceptual separability” standard in US law, separating artistic features from utilitarian functions. ([Para 41])

Esquire Inc v. Ringer (US Court of Appeals, District of Columbia Circuit)

Cited for interpreting the US Copyright Act, 1976, to exclude utilitarian designs from copyright protection despite aesthetic elements. ([Para 43])

Kieselstein-Cord v. Accessories by Pearl Inc (US Court of Appeals, Second Circuit)

Referred to for introducing the primary-subsidiary approach to conceptual separability, prioritizing artistic features over utilitarian functions. ([Para 44])

Carol Barnhart Inc. v. Economy Cover Corp (US Court of Appeals, Second Circuit)

Cited for holding that conceptual separability requires artistic features to be non-essential to the article’s utilitarian function. ([Para 44])

Star Athletica LLC v. Varsity Brands Inc (US Supreme Court, 2017)

Extensively relied upon for establishing a clear test for copyright protection of features in useful articles, requiring separability and independent artistic qualification. ([Para 47])

Warner Brothers v. Roadrunner (1988 FSR 292, UK)

Cited in Dart Industries to clarify that copyright in artistic drawings used as industrial models may persist unless intended for industrial use at creation. ([Para 25])