Criticism over Misleading Advertisements
WhiteHat Jr is an education technology startup that provides live online coding classes for children. Its ambitious advertisements have claimed things like “your kid can code a spaceship in just 46 mins”[i], “your kid will be on the next flight to Silicon Valley, USA”[ii] and “INR 20 Cr salary at age 13”[iii]. Further, the ads featured a young child, Wolf Gupta, who got a job with Google, but his name and salary package varied in different ads. Only later, in a subsequent lawsuit, did WhiteHat Jr admit that Wolf Gupta is “an imaginary child”.[iv] The company website also displayed testimonials to portray that children enrolled in their classes have developed world-class apps; however, while these apps are found on GooglePlay, they have sub-standard reviews and are not registered under the child’s who allegedly developed them, but under the name “WhiteHat Jr”.[v]
Unsurprisingly, WhiteHat Jr has recently been criticized for aggressive and misleading advertising practices, along with its curriculum and teachers.[vi] While WhteHat Jr accepted that its “marketing campaigns were poorly designed”[vii] and claimed that “legitimate, honest fact-based criticism is truly welcome”[viii], it nonetheless proceeded to report numerous posts criticizing the startup on numerous websites, such as Twitter and YouTube.[ix] It also filed two lawsuits against two of its critics, Pradeep Poonia and Aniruddha Malpani. While these cases inculcate various legal themes such as misleading advertisements, hacking, defamation, this article focuses on the Intellectual Property Rights concerns that have been raised.
The Two Lawsuits
I. Karan Bajaj v. Pradeep Poonia[x]
WhiteHat Jr filed a case against a critic Pradeep Poonia, seeking an injunction to restrain the latter from diluting and tarnishing trademark, and infringing of trademarks and copyrights, inter alia. WhiteHat Jr holds a registered trademark for “WhiteHat Jr”, and their infringement claim arose as Poonia’s tweet used the marks ‘WhiteHat Sr’ and ‘WhiteHatPoonia’ and his YouTube Channel was named ‘WhiteHat Sr’. Poonia’s defense was that he did not undertake any commercial activity while using the trademark and that there was no financial gain to him. According to him, his sole purpose was to post reviews about WhiteHat Jr which, according to him, was scamming people.[xi]
Interestingly, the court found that the three factors to determine interim injunction, namely prima facie case, the balance of convincing and irreparable harm, were favoring WhiteHat Jr, and therefore granted an interim injunction.[xii] It is pertinent to note that the single judge bench concluded the judgment right after stating the arguments by both parties. No reasoning has been provided in the judgment.
II. Whitehat v. Aniruddha Malpani[xiii]
WhiteHat Jr filed a suit against Aniruddha Malpani seeking an injunction with the purpose of restraining him from infringement of trade mark, dilution, and tarnishing of trade marks, inter alia. WhiteHat Jr claimed that Malpani “is an IVF specialist and founder of the angel investment firm Malpani Ventures, has invested in several start-ups dealing in educational technology”[xiv] and that his tweets referred to their registered trade marks and amounted to defamation/disparagement/dilution/tarnishing of trade marks. Malpani’s counsel raised questions of territorial jurisdiction and further stated that Malpani needs to file his affidavit to present the correct facts. Nevertheless, the court again found the three factors were in WhiteHat Jr’s favor and granted a limited ad-interim injunction[xv] to restrain Malpani. The judgment, which was passed by the same single judge who passed the order against Poonia, again did not reason out its findings.
Alleged Intellectual Property Right Infringements
Trademark Infringement: “In the Course of Trade”
The Trade Marks Act, 1999 (“The 1999 Act”) [xvi] specifies that for a user to constitute trade mark infringement, the user should be “in the course of trade”. While this term is vague, it is a vital ingredient for trademark infringement.[xvii] While the Indian courts have not defined the term vis-a-vis the trademark law, the European courts have.
In L’Oréal SA v eBay International AG[xviii], the Court of Justice of the European Union (“ECJ”) opined that a sale on an online marketplace that has not taken place as a commercial activity will be an infringement of a trademark. However, if due to factors like volume and frequency, transactions made in an online marketplace go beyond the realms of private activity, it will constitute “in the course of trade”. In O2 Holdings Ltd v. Hutchison 3G[xix], the Court opined that in cases of trademark infringement, the basic question is to see if the trademark was used “in the course of trade”. In 2020, the ECJ opined that for use to be “in the course of trade”, it is appropriate to consider certain objective factors, such as the import of the goods.[xx] It further held that economic remuneration in the transaction was irrelevant.
Briefly put, use is “in the course of trade” while it is a commercial activity and not in the private sphere.[xxi]
The Theory of Trademark Dilution
The theory of trademark dilution originated in Eastman Photographic Materials Co. v. John Griffith Corp.[xxii], where a dispute arose between a photographic trader and a bicycle company. Despite there being no prima facie connection between a photographic camera and a bicycle, the Court opined that the word “Kodak” had come to be identified with the plaintiff’s company, and the bicycle company was trying to benefit from the former’s reputation. While this case is the origination of the theory, it was Frank Schechter[xxiii] who discussed the theory and its philosophy in great detail and thus launched it.[xxiv]
This concept has been imported into Indian jurisprudence and is enshrined in Section 29(4) of the 1999 Act[xxv]. The provision applies when a “well-known trademark” is used in a non-competing industry. Trademark dilution generally takes place in two ways: blurring and tarnishing.[xxvi] While the two terms are not defined in India’s legislations, blurring refers to impairing the ‘distinctiveness’ of the mark, while tarnishing refers to harming the of the mark.[xxvii]
The Indian judiciary had recognized the theory of dilution before it was manifested in the 1999 Act. In Daimler Benz Aktiengesellschaft v. Hybo Hindustan[xxviii], the earliest judgment dealing with dilution, the Court stated that Benz referred to “a very high priced and extremely well-engineered product” and therefore the name cannot be diluted by using it for undergarments.
In ITC Limited v. Philip Morris Products[xxix], the Delhi High Court held that the essential elements to constitute dilution of a trade mark as follows:
“The impugned mark is identical or similar to the senior mark;
The senior or injured mark has a reputation in India;
The use of the impugned mark is without due cause;
The use of the impugned mark (amounts to) taking unfair advantage of, or is detrimental to, the distinctive character or reputation of the registered trade mark.”
In March 2020, in Bayerische Motoren Werke AG v. Om Balajee Automobile[xxx], the Delhi High Court relied on ITC Limited v. Philip Morris Products[xxxi]and further noted that t the “deceptively similar” standard would not apply to dilution claims under Section 29(4).
The position in India regarding trademark dilution seems less stringent than the position in the USA.[xxxii] While the 1999 Act simply mandates that the registered trademark have a “reputation in India”[xxxiii], the USA’s Federal Trademark Dilution Act of 1995[xxxiv] only protects “famous” marks. Further, the factors to determine “famous marks” are provided in the Trademark Dilution Revision Act of 2006.[xxxv]
Copyrights: Doctrine of Fair Dealing Exception
In the USA, Section 107 of the US Copyright Act, 1976[xxxvi] talks about the fair use doctrine and lays down the factors for determining fair use. These factors refer to the nature of work, the amount of potion used, the effect on the value, etc.
Section 52(1) of the Copyright Act, 1957 (“The 1957 Act”)[xxxvii] provides the exceptions to copyright infringement and lays out the fair dealing exception. The factors for determining fair use in the USA do not apply in India. In 2016, the Delhi High Court stated clearly that “the general principle of fair use would be required to be read into the clause and not the four principles on which fair use is determined in jurisdictions abroad and especially in the United States of America”[xxxviii].
In Blackwood and Sons v. A.N Parasuraman[xxxix], laid down that objective of fair dealing should not be, firstly, to enter into the competition and gain profits, and secondly, oblique and improper.
In Wiley Eastern v. Indian Institute of Management,[xl] the Court emphasized that the purpose of Section 52 of the 1957 Act is “to protect the freedom of expression under Article 19(g) of the Constitution” and to protect research, study, criticism, review, and reports. In Syndicate of Press of University of Cambridge v. Kasturi Lal & Sons[xli], the Court stated that while a criticism discusses the pros and cons of original work and a review summarises the work and presents it to a third person for their perusal, the “verbatim lifting of the text to the extent of copying the complete set of exercise and the key to such exercise can in no manner be termed as a review, criticism or a guide to the original work.” Parodies[xlii] and reporting of current events[xliii] have also been held to fall within fair dealing.
Trademarks: Nominative Fair Use
The theory of nominative fair use is manifested in Section 30(2)(d) of the 1999 Act[xliv], which elucidates an exception to trademark infringement. Under this provision, using a registered trademark in relation to “goods adapted to form part of, or to be accessory to, other goods or services” is not an infringement, as long as it is “reasonably necessary”. The doctrine originates from a US case[xlv], where the Court held that using a famous singer’s name was necessary to carry out a survey, and such use would infringe the trademark.
In India, the Chennai High Court[xlvi] has stated three requirements to be fulfilled for the doctrine of nominative fair use to apply, namely. Firstly, the impugned product/service should not be easily identifiable without the trademark; secondly, the mark should be used only to the extent that is reasonably necessary for the identification of the product/service; and finally, there should be nothing that shows any kind of endorsement given by the holder of the mark.
Thus, Indian courts have often reinforced the theory of nominative fair use which generally applies to non-commercial uses, for example, commentary, parodies, criticisms, etc.[xlvii]
It is pertinent to reiterate that for claims relating to infringement of a trade mark, including the trademark dilution theory, it is required that the trade mark be used “in the course of trade”. In the WhiteHat Jr controversy, the defendants in both the cases used the trademark to post unflattering reviews on the internet. This is unlikely to fall within the scope of the term “in the course of trade”, and hence the theory of trade mark dilution would most probably not apply. Further, criticism, reviews, and nominative fair use are protected under IPR legislations in India. Therefore, it would be interesting to see whether the court finds that criticism by Aniruddha Malpani, an investor in a competing company, would be a commercial activity or not and whether the tweets and videos posted by Pradeep Poonia would amount to trade mark and copyright infringement, as has been claimed by WhiteHat Jr.
This article can be cited as:
Kavya Jha, The Whitehat Jr Controversy: Trademark and Copyright Concerns, Metacept- InfoTech and IPR, accessible at https://metacept.com/the-whitehat-jr-controversy:-trademark-and-copyright-concerns.
[i] Promit Guha , Will Fight Till My Pockets Are Empty,” Says Pradeep Poonia, Whitehat Jr’s Critic, After It Files 20 Cr Defamation Suit, The Indian Feed (Nov. 26, 2020), https://www.theindianfeed.in/i-will-fight-till-my-pockets-are-empty-says-pradeep-poonia-the-whistleblower-of-alleged-unethical-and-scam-edu-platform-whitehat-jr-after-the-company-files-20-crore-defamation-case-against-him/.
[ii] Rajiv Singh, Exclusive: Advertising body asks WhiteHat Jr to pull down ads, Forbes India (Oct. 27, 2020, 9:15 p.m.), https://www.forbesindia.com/article/special/exclusive-advertising-body-asks-whitehat-jr-to-pull-down-ads/63767/1.
[iii] Harshit Rakheja, WhiteHat Jr Told To Remove Misleading Ads After Social Media Furore, Inc42 (Oct. 28, 2020), https://inc42.com/buzz/whitehat-jr-told-to-remove-misleading-ads-after-social-media-furore/.
[iv] Apoorva Mandhani and Regina Mihindukulasuriya, Boon for locked down kids or ‘marketing hype’? Decoding WhiteHat Jr’s legal brawls with critics, The Print (Nov. 30, 2020, 9:59 a.m.), https://theprint.in/india/boon-for-locked-down-kids-or-marketing-hype-decoding-whitehat-jrs-legal-brawls-with-critics/554008/.
[v] Singh, supra note 2.
[vi] Mandhani and Mihindukulasuriya, supra note 4.
[vii] Manish Singh, Byju’s-owned Indian startup WhiteHat Jr sues critics, TechCrunch (Nov. 22, 2020, 10:31 p.m.), https://techcrunch.com/2020/11/22/whitehat-jrs-founder-files-2-6m-defamation-suit-against-critic/.
[ix] Pankadi Mehta Kadakia, WhiteHat Jr and the curious case of disappearing dissent, Forbes India (Oct. 22, 2020, 1:11 p.m.), https://www.forbesindia.com/article/take-one-big-story-of-the-day/whitehat-jr-and-the-curious-case-of-disappearing-dissent/63627/1.
[x] Karan Bajaj v. Pradeep Poonia, CS(COMM) 515/2020.
[xi] Guha, supra note 1.
[xii] Karan Bajaj v. Pradeep Poonia, CS(COMM) 515/2020.
[xiii] Whitehat Education Technology Pvt. Ltd v. Aniruddha Malpani, CS(COMM) 518/2020.
[xvi] Trade Marks Act, 1999, No. 47, Acts of Parliament, 1999, s. 29.
[xvii] Agnieszka Sztoldman, Private or infringing use? Cigars, cognacs and ball bearings in CJEU’s tale of counterfeiting, Kluwer Trademark Blog (Jun. 2, 2020), http://trademarkblog.kluweriplaw.com/2020/06/02/private-or-infringing-use-cigars-cognacs-and-ball-bearings-in-cjeus-tale-of-counterfeiting/.
[xviii] L’Oréal SA v. eBay International AG,  ECR I-6011.
[xix] O2 Holdings Ltd v. Hutchison 3G Ltd,  EWHC 534 (Ch).
[xx] A v. B, C-772/18, The Court (Tenth Chamber) (E.U.).
[xxi] Sztoldman, supra note 17.
[xxii] Eastman Photographic materials Co. v. John Griffith Corp., 15 RPC 105 (1898) (U.K.).
[xxiii] Frank Schechter, Rational Basis of Trademark Protection, 40 Harv L Rev 813, 822 (1927).
[xxiv] T.G. Agitha, Trademark Dilution: Indian Approach, 50 Journal of Indian Law Institute, 339, 340 (2008).
[xxv] Trade Marks Act, 1999, No. 47, Acts of Parliament, 1999, s. 29(4).
[xxvi] Agitha, supra note 24.
[xxvii] Brajendu Bhaskar, Trademark Dilution Doctrine: The Scenario Post TDRA 2005, 1 NUJS L. Rev., 637, 640 (2008).
[xxviii] Daimler Benz Aktiegesellschaft v. Hybo Hindustan, AIR 1994 Delhi 239.
[xxix] ITC Limited v. Philip Morris Products SA and Ors, ILR (2010) 2 DELHI 455.
[xxx] Bayerische Motoren Werke AG v. Om Balajee Automobile, CS(COMM) 292/2017.
[xxxi] ITC Limited v. Philip Morris Products SA and Ors, ILR (2010) 2 DELHI 455.
[xxxii] Raja Selvam, Trademark Dilution in India – Yes or No!, Selvam & Selvam (Mar. 11, 2013), https://selvams.com/blog/trademark-dilution-india/.
[xxxiii] Trade Marks Act, 1999, No. 47, Acts of Parliament, 1999, s. 29(4).
[xxxiv] Federal Trademark Dilution Act, 1995, 15 U.S.C. §1051 (1995).
[xxxv] Trademark Dilution Revision Act, 2006, 15 U.S.C. §1125 (2006).
[xxxvi] Copyright Act, 1976, 17 U.S.C. §§ 101-810 (1976).
[xxxvii] Copyright Act, 1957, No. 14, Acts of Parliament, 1957, s. 52(1).
[xxxviii] The Chancellor, Masters & Scholars of the University of Oxford & Ors. v. Rameshwari Photocopy Services & Ors, CS (OS) 2439/2012.
[xxxix] Blackwood & Sons. Ltd. v. A.N Parasuraman, AIR 1959 Mad 410.
[xl] Wiley Eastern Ltd and Ors v. Indian Institute of Management, 61 (1996) DLT 281.
[xli] Syndicate of Press of University of Cambridge v. Kasturi Lal & Sons, 2006 (32) PTC 487 Del.
[xlii] Campbell v. Acuff- Rose Music, 510 U.S. 569.
[xliii] Reliance Petrochemicals v. Indian Express Newspapers, 1989 AIR 190.
[xliv] Trade Marks Act, 1999, No. 47, Acts of Parliament, 1999, s. 30(4).
[xlv] New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302, 308 (9th Cir.) 1992.
[xlvi] Consim Info Pvt. Ltd.v. Google India Pvt. Ltd. and Ors, 2010 (6) CTC 813.
[xlvii] Nandan Pendsey and Sudeshna Panigrahi, Doctrine of ‘nominative fair use’ under Trademark law, AZB & Partners (Dec. 20, 2019), https://www.azbpartners.com/bank/doctrine-of-nominative-fair-use-under-trademark-law/.