The suit relates to infringement of intellectual property rights in the designing and manufacturing of the internal parts of cryogenic storage tanks and distribution systems which are mounted on trailers and semi-trailers, for transporting industrial gases, liquified natural gas.

Inox India Limited filed copyright infringement suits against the defendants, Cryogas Equipment Private Limited (Cryogas) and LNG Express India Private Limited (LNG). Inox alleged that Cryogas and LNG had infringed their copyright in: (i) proprietary engineering drawings; and (ii) literary works in the details, processes, descriptions and narrations while creating the said drawings. ​ Cryogas and LNG defended the suit and argued that Inox’s proprietary engineering drawings fell within the definition of ‘designs’ under Section 2(d) of the Designs Act, 2000 (the Designs Act).

Further, it was argued that Inox had lost copyrights for the said drawings under Section 15(2) of the Copyright Act, 1957 (the Copyright Act) as: (i) it failed to register them as designs under the Designs Act and (ii) it had reproduced the article with the design more than fifty times through an industrial process. Under Section 15(2), copyright in any design, which is capable of being registered under the Designs Act, but which has not been so registered, shall cease as soon as any article to which the design has been applied has been reproduced more than fifty times by an industrial process by the owner of the copyright.

The trial court accepted the arguments of Cryogas and LNG and rejected Inox’s plaint. Upon appeal by Inox, the Gujarat High Court set aside the rejection order and restored the suit for fresh consideration by the trial court. Yet again, the trial court rejected the plaint and Inox appealed before the High Court, and the High Court reversed the order of the trial court. Among others, the High Court found that the trial court erred in law by presuming that the proprietary engineering drawings qualified as a ‘design’ under Section 2(d) of the Designs Act, thus excluding them from the purview of protection under the Copyright Act. Cryogas and LNG appealed the rejection order before the Supreme Court.

The Supreme Court examined the arguments of the parties and set out the definitive factors to be considered to ascertain whether an article ought to be conferred protection under the Copyright Act or the Designs Act. In particular, the Supreme Court considered the ratio of Microfibres Inc (K&S Partners had represented the winning party before the Delhi High Court) and Dart Industries wherein the Delhi High Court harmonized the protection to offered under the Copyright and Design Act. The Supreme Court also analysed the “functional utility” test to assess the dominant purpose of the work as aesthetic or functional while examining eligibility for design protection. ​

While dismissing the appeals, the Supreme Court noted that it cannot be assumed that what does not qualify as an ‘artistic work’, within the meaning of the Copyright Act, would automatically be protected under the Designs Act. While protection under the Designs Act is not granted by default and requires specific criteria to be met, the Court noted that Indian and international courts have consistently applied the test of ‘functional utility’ to determine whether a work qualifies for protection under the Design Act. Accordingly, the       SC laid down a two-fold approach to navigate the perceived complexities arising from Section 15(2) of the Copyright Act while ascertaining whether a work is qualified to be protected under the Designs Act as follows: