Legislative and Regulatory Update

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In This Issue

[No.110]                                                                            January 20, 2005

International
CBDT
Service Tax
RBI
Telecom Regulatory Authority of India (TRAI)
Ministry of Law and Justice
Supreme Court
High Courts

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International Legal News

Cases

Source: Westlawinternational.com

  • Parties: Intervenor failed to establish ownership of trademark infringement defendant.

The alleged sole proprietor of an Internet domain name registrant was not entitled to intervene in a trademark owner's infringement action against the registrant absent evidence supporting his claimed ownership interest. No documentary evidence supported the claim, and it was contradicted both by allegations made by the alleged proprietor in a prior lawsuit and by evidence that third parties had conducted the registrant's affairs.

United Parcel Service of America, Inc. v. Net, Inc.

  • Advertising: Comparison between mouthwash and dental floss warranted preliminary injunction in Lanham Act case.

A dental floss manufacturer was entitled to a preliminary injunction in its action against a mouthwash manufacturer for false advertising in violation of the Lanham Act. A presumption of irreparable harm arose from the floss manufacturer's showing of a likelihood of success on the merits of its claim that the mouthwash manufacturer's direct comparisons of its product to dental floss were literally false, and irreparable harm was also shown via a logical causal connection between the floss manufacturer's sales position and the challenged statements that using the touted mouthwash provided the same benefits as flossing. In addition, the floss manufacturer proved a likelihood of success on the merits of both its literal and implied falsity claims, given that the clinical studies cited by the mouthwash manufacturer supported only the contention that using its mouthwash was as effective as improperly- performed flossing, and only addressed certain consumers.

McNeil-PPC, Inc. v. Pfizer Inc.

  • Discovery: Failure to disclose potential witness warranted sanction of expedited deposition.

The failure of a national distributor for an automobile manufacturer to disclose, in an antitrust action by consumers, the identity of its associate general counsel and assistant secretary and the subject matter of his knowledge regarding the relationship between the distributor and a vehicle financing company during discovery on the distributor's defense under the Illinois Brick indirect purchaser rule did not warrant the sanction of striking this witness's affidavit offered in support of the distributor's motion for partial summary judgment. The fact that the violation could be cured, the importance of the information to the distributor's defense, and the minimal disruption that the nondisclosure was likely to cause made it more appropriate to sanction the distributor by allowing the consumers to depose the witness on an expedited basis, with the costs, excluding attorney fees, to be borne by the distributor.

In re Mercedes-Benz Anti-Trust Litigation

  • Refusals to Deal: Patentee's licensing scheme did not improperly deny competitor essential facility.

Insistence, by the owner of patents for the automated performance of nucleic acid amplification on thermal cyclers, that a seller of thermal cyclers take a supplier's license, rather than end-user licenses for use by its customers, did not constitute an improper exclusion from an essential facility, within the meaning of the Sherman Act.

Applera Corp. v. MJ Research, Inc.

  • Debt Collection: A debt could be set off after default without first accelerating the debt.

In a matter of first impression, the Court of Appeals ruled that a bank could set off the debtor's deposit account upon default without first accelerating the debt, under terms of a promissory note that allowed for alternative remedies of acceleration and setoff. In this case, the bank received a garnishment from judgment creditors, which was a default under the note, and set off the debtor's account without first accelerating the debt.

Minnesota Voyageur Houseboats, Inc. v. Las Vegas Marine Supply, Inc.

  • Contracts: Name on email was a valid signature satisfying statute of frauds.

A toy maker's employee's name on an 1997 email was a valid writing and signature to satisfy California's statute of frauds, assuming that there was a binding oral agreement between inventor and toy maker and that the email included all the material terms of that agreement. Decisions from other states had relaxed the signature requirement of the Statute of Frauds considerably to accommodate various forms of electronic communication.

Lamle v. Mattel, Inc.

  • Internet: E-mail statute did not regulate pop-up ads.

A cruise line's internet pop-up ad, that appeared on a computer user's computer screen while the computer user was reading the travel section of a newspaper's website, was not regulated by the provisions of a state statute that governed unsolicited commercial e-mail. The clear language of the statute limited its scope to the regulation of e-mail sent through an e-mail service provider to an e-mail address. The pop-up ad was not sent to a specific e-mail address, but was produced by the host website which directed the computer user's internet browser to open another window and display particular content.

Riddle v. Celebrity Cruises, Inc.

  • Arbitration: Nonreviewability of order remanding injured maritime worker's claim to state court--Certiorari Denied.

Denying certiorari, the United States Supreme Court has let stand a Fifth Circuit decision that a district court order denying a stay and declining to compel arbitration of a maritime injury claim, based on a determination that the foreign arbitration agreement upon which removal had been based was invalid, was not reviewable on appeal. The order was not a conclusive determination, separable from the court's remand order, and thus was subject to the statute barring appellate review of orders remanding cases due to lack of subject matter jurisdiction. The petition for certiorari stated that, in practical effect, the rulings in the courts below were that an act of the Louisiana legislature nullifies a treaty of the United States and that a district court remand order to that effect is immune from appellate review.

Talmidge Intern., Ltd. v. Dahiya

  • Intellectual Property: Digital Millennium Copyright Act protected website host from copyright liability for images provided by vendors.

An Internet service provider, which merely provided the forum for independent third party vendors to list and sell their merchandise, satisfied all of the requirements for copyright protection under the safe harbor provision of the Digital Millennium Copyright Act. The copyright holder, which never attempted to notify service provider that the vendors were selling images that violated its copyrights, failed to show either the service provider's actual knowledge or its apparent knowledge of infringing material on its third party vendor platform, and the service provider did not have the right and ability to control the infringing material.

Corbis Corp. v. Amazon.com, Inc

  • Lien: Extinguishment of maritime lien when vessel sinks--Certiorari Denied.

The United States Supreme Court has denied certiorari in a case in which a district court held that a shipyard's valid maritime lien against a commercial fishing vessel did not transfer to a replacement vessel but, rather, was extinguished when the first vessel sank and could not be recovered. Although the vessel's owner obtained new fishing permits for the replacement vessel based on confirmation of the destroyed vessel's permit history (CPH), such permits and permit history did not constitute "salvaged" appurtenances of the destroyed vessel to which the maritime lien attached, the district court held. The Third Circuit Court of Appeals affirmed on different grounds, holding that, assuming a vessel's fishing history could be the subject of a maritime lien, the shipyard's lien did not follow the transfer of the vessel's fishing history to the replacement vessel since the shipyard did not provide services to the replacement vessel. The petition for certiorari challenged the district court's reasoning, arguing that maritime liens extend to salvaged appurtenances, including appurtenances removed from a vessel, that any maritime lien is enforceable by an in rem action, and that an appurtenance may solely constitute the res of an in rem action.

Maine Shipyard & Marine Railway, Inc. v. PNC Bank Delaware, Inc.

News

  • Supreme of Ukraine rejects allegations of rigging in elections

The Supreme Court of Ukraine disposed of a petition challenging the results of the election for the post of President of the country. Bohdan Yakubchyk, had been declared as the winner of the presidential elections, he had himself forced a re run of the elections after allegations of rigging had been leveled by him after the original poll held in the month of November last year. The decision is final and no appeals lie against it.

  • US court lets off Saudi Arabia

Saudi Arabia’s impleadment as party in the litigations arising out of the 9/11 incident in the United States has been shot down by a US district court, it has been held that the country and its diplomats enjoys diplomatic immunity and as such are immune to legal proceedings launched against them. The litigations had been instituted by family members of victims and survivors of the terrorist attack. It was also held that banks used by the perpetrators of the attacks, for regular banking transactions were in no way liable. Claim against Saudi Bin Laden Group was allowed to be proceeded, however the extent of the liability of the Group will only be determined after trial.

  • GM pays $ 1 million towards penalties

General Motors paid a civil penalty of $1 million to settle charges that notifications of the existence of a safety-related defect were not provided by the company. Some vehicles manufactured and sold by General Motors had manufacturing defects, which led to windshield wiper failure. These vehicles had been manufactured in 2002 and 2003.

The National Highway Traffic Safety Administration accepted payment on July 22, 2004, but did not announce the penalty until Dec. 29, when it published an annual roundup of civil actions. Porsche and Ferrari paid civil penalties totaling more than $9 million for failing to meet Corporate Average Fuel Economy limits.

  • Claims of Gauntamano Prisoners dismissed

A district court in US dismissed claims of prisoners at Gauntanamo Bay challenging the fairness of  their detention in the prison. The judge indicated that the rights of prisoners are subject to military review as well as congressional laws, however foreign nationals detained by US forces outside US had no constitutional rights.

  • Challenge to offering of prayers at Presidential inauguration rejected

US Supreme court declined to ban the offering of  prayers at the Presidential inaugural ceremonies. It was observed that the stipulation could not be said to be an unconstitutional violation of the separation of the church and the state. The court did not accede to the prayer that the chief justice recuses himself on the ground that merely performing the swearing in did not amount a conflict of interest.

  • Iraqi POW abuse scandal

UK soldiers involved in the abuse of Iraqi civilians have claimed that they were merely following orders of their commander. They have claimed that the officer in charge had given explicit orders to  implement an operation aimed to capture alleged looters and instructed his troops to “work them hard”. The British PM has issued a statement condemning the maltreatment of Iraqi civilians.

CBDT

  • Income Tax Relief u/s 80G for Donations to the PM's National Relief Fund

Circular No. 2/2005 Dated 12.01.2005: The Central Board of Direct Taxes has notified that employees who make donations to the Prime Minister's National Relief Fund, the Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund are eligible to claim deduction u/s 80G of the Income-tax Act, 1961. The circular clarifies that in cases where employees makes donation to these funds through their employers, it is not possible for such funds to issue separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of consolidated cheque. Therefore, claims in respect of such donations will be admissible u/s. 80G of the Income-tax Act, 1961 on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf.

Service Tax
  • Service Tax (Amendment) Rules, 2005

Notification No: 1/2005 Dated 14.01.2005: The Ministry of Finance and Company Affairs notifies that the Service Tax Rules, 1994 has been amended by the Service Tax (Amendment) Rules, 2005. The said Service Tax (Amendment) Rules, 2005 inserts a new proviso to the Service Tax Rules, 1994 that the Service Tax on the value of taxable services received during the month of March or the quarter ending March, shall be paid to the credit of the Central Government by the 31st day of March of the calendar year.

RBI

  • Names of UCBs as Appearing in the Certificate of Registration and in the Licence

Circular No: UBD(PCB).Cir.34/16.51.00/2004-05 Dated 10.01.2005: The Reserve Bank of India vide the above circular to Primary (Urban) Co-operative Banks issues instructions to them that it is mandatory for every bank to display its full name in any stationery item, publicity material, name board, etc and that the same must conform to the name as it is appearing in the Certificate of Registration and the licence granted to the bank by Reserve Bank of India. Further, the banks are prohibited from using any abridged form of their name. The Banks are also advised to ensure that all advertisement/s, stationery items, boards, etc. not correctly depicting their names in accordance with the Certificate of Registration & the licence issued to them are withdrawn and a compliance report is furnished to the concerned Regional Office of Reserve Bank of India on or before March 31, 2005. These instructions are issued under Section 35A of the Banking Regulation Act, 1949(AACS) and any contravention of or non-compliance with the same will attract penalties under the relevant provisions of the Act.

  • Issue of Payment Orders/Drafts for Matured Bonds under Relief/Savings Bonds Schemes

Circular No: CO.DT.13.01.299/H.6284-6313/2004-05 Dated 15.01.2005: The Reserve Bank of India vide the above circular has issued directions to the State Bank of India, it’s Associate banks and 17 Nationalised bank as well as ICICI/IDBI/HDFC/UTI Bank Ltd and Stock Holding Corporation of India Ltd to issue Payment Order representing the Maturity Proceed in the name of the Joint Holder in whose favour the Power of Attorney has been executed on request. The circular explains that with a view to providing better customer service, it has now been decided to allow release of Maturity Proceeds also in favour of one of the joint holders in whose favour all other remaining holders have executed a Power of Attorney as per the Joint Holders Power of Attorney.

Telecom Regulatory Authority of India (TRAI)
  • ISO Certificate to TRAI

Press Release No. 2/2005 Dated 05.01.2005: The Telecom Regulatory Authority of India (TRAI) vide the above press release notifies that it has obtained the Quality Management System Certificate License under ISO 9001:2000 from Bureau of Indian Standards with effect from 1st December, 2004. The license issued is operative for a period of 3 years. TRAI is one of the first few regulatory bodies in the world to obtain the quality management certificate license under ISO 9001:2000.

  • Direction to MTNL for Withdrawal of Advertisement of Garuda-FW Service as "Landline bhi - Mobile bhi"

Press Release No. 7/2005 Dated 12.01.2005: The Telecom Regulatory Authority of India vide the above press release notifies that directions have been issued to Mahanagar Telephone Nigam Ltd for withdrawal of Advertisement of Garuda-FW Service as “Landline bhi-Mobile bhi-Jahan Aap Wahan”. The Authority is of the view that the above advertisement conveys the impression to potential customers that the service provided is similar to mobile service when actually fixed wireless services are offered. Accordingly, MTNL has been ordered to withdraw from the market all promotional materials including banners, brochures information sheets, etc regarding the same.

Ministry of Law and Justice 

Legislative

  • The Unlawful Activities (Prevention) Amendment Act, 2004

Notification No. 29/2004 Dated 30.12.2004: The Ministry of Law and Justice notifies that that The Unlawful Activities (Prevention) Amendment Act, 2004 of Parliament received the assent of the President on the 29th December 2004. The provisions of the above Act are deemed to have come into force on the 21st day of September 2004. The above Act amends the Unlawful Activities (Prevention) Act, 1967.

Supreme Court
  • Jamshed N. Guzdar Vs. State of Maharashtra and others

The abolition of Letters Patent appeal and the change in the pecuniary jurisdiction of the High Court were challenged before the High Court, apart from questioning the competence of the state legislature to enact such laws it was contended that the acts were ultra vires of Article 14 and Article 19 of the constitution. The High Court allowed the petition challenging the abolition of the Letters Patent appeal, whereas the other writ was dismissed. Separate appeals were filed before the Apex Court challenging the correctness of the orders of the High Court.

The Supreme Court upheld the constitutional validity of both the Acts, it was observed that merely because an Act did not provide for an appeal the statute would not be rendered constitutionally invalid, however, the state government was directed to first ensure the adequacy of infrastructure in lower courts before implementing the notification enhancing the pecuniary jurisdiction of lower courts.

  • Fatima Riswana Vs. State Represented by A.C. P., Chennai and others

The accused  was alleged to have been involved in making pornographic photos and videos and thereafter selling them to foreign websites. The trial of the case was allotted to a Fast Track Court presided over by a lady judge. An application for supply of copies of all the objectionable CDs was dismissed by the trial court and by the High Court on the ground that giving copies of the same might give room for their  illegal circulation, however the accused was permitted to peruse the same in the presence of the presiding officer, it was left to the judge concerned to seek transfer of the case if she so desired.

On an application filed by the accused the case was transferred, however, this was objected to by a lady witness, it was her contention that given the nature of the case she would be more comfortable deposing before a lady judge. The matter was finally decided by the Supreme court, while transferring the case back to the original court, it was observed that embarrassment was a state of mind which is more individual related, than to the sex of the person.

High Courts

Delhi

  • Gokaldas Images Ltd. & Ors. V. Union of India and another

The petitioners questioned the authority of respondent Apparel Export Promotion Council (APEC) to levy penalty for non utilization of the quota allotted to respective petitioners. Petitioners also seek to challenge the basis for calculation of the extent of utilization of the extent of the export entitlement.

The Delhi High Court held that there is no dispute that the Export & Import Policy has statutory force in view of Section 5 of the Foreign Trade (Development Regulation) Act, 1992, read with the Export & Import Policy & the Garment Export Entitlement Policy. Thus, though there can be no dispute over the propositions, as enunciated in the various judgments cited by learned Senior Counsel for the petitioners on the issue, the fact of the matter is that there is no violation of any of these principles. It has also to be appreciated that there must be free play with the Government, especially in matters of economic policy formulation and such economic policies are not subject to judicial review unless it is demonstrated that the same is contrary to any statutory provision or the Constitution.

Karnataka

  • Dr. B.R. Ambedkar Medical College, Bangalore & Another V. Union of India and others

The Medical Council of India (MCI) fixed the intake in the petitioner college to 100. Against this restriction the college filed a writ petition, the same was dismissed and  the petitioner preferred  an appeal. While allowing the appeal, the High Court at Madras held that, the only point that arises for consideration is the power of MCI to pass impugned orders stopping admission to a medical college which was duly recognized prior to insertion of Sections 10 A, 10 B & 10 C of the Act and whether that power could be exercised in violation of principles of natural justice.

It was held that, the object of all interpretations is to discover the intention of the legislature, but the intention of the legislature must be deduced from the language used and it has to be construed according to the intention expressed in the Acts themselves. If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary and natural sense.

Tamil Nadu

  • Rohit Sharma Vs The Controller of Examinations, Pondicherry and others

In the present cases a writ petition was filed by the Petitioner student before the High Court for setting aside the order of The Controller of Examination, Pondicherry canceling all the examinations undertaken by him in that semester. The petitioner was stopped from writing Microbiology II paper after two hours on the ground that some extra papers were found below his desk. The petitioner was served with a show cause notice and after getting an explanation on the same the Controller of Examinations passed the impugned order. A writ petition was filed challenging the action of the authorities.

The petitioner contended that the impugned order was violative of the principles of natural justice since he was not given a proper opportunity to be heard and that he was not furnished with the details of the materials based on which the impugned order had been passed. The High Court at Madras accepted the contentions of the petitioner and quashed the order passed by The Controller of Examinations, Pondicherry.