Industrial Design Valuation India.
Industrial Design Valuation in India
Introduction
Industrial designs protect the aesthetic or ornamental aspects of a product, such as shape, pattern, or configuration. In India, they are governed by:
The Designs Act, 2000
Design Rules, 2001
Valuation of industrial designs refers to assessing the economic worth of a design for purposes such as:
Licensing or assignment
Sale or commercial exploitation
Infringement damages
Accounting and taxation
Collateral for financing
The valuation process considers originality, novelty, market demand, industry sector, and exclusivity.
Factors Affecting Industrial Design Valuation
Novelty and Originality
New, unique designs have higher value.
Market Demand
Designs for high-demand products (electronics, automobiles, furniture) are more valuable.
Commercial Use
Designs with potential for mass production or licensing increase valuation.
Legal Protection
Registered designs with long-term protection are more valuable.
Infringement Risk
Risk of copying can reduce valuation unless enforceable through injunctions.
Industry Standards & Life Cycle
Trend-sensitive industries (fashion, consumer goods) require short-term valuation adjustments.
Methods of Industrial Design Valuation
Cost-based: Based on creation, registration, and development costs.
Market-based: Based on royalty rates or sale price of similar designs.
Income-based: Based on expected revenue, licensing fees, or cost savings.
Expert Appraisal: Professional valuers analyze industry norms, market trends, and exclusivity.
Key Case Laws on Industrial Design and Valuation
1. Asian Paints (India) Ltd. v. Hari Krishna (2000)
Facts: Dispute over container designs for paints. The plaintiff sought damages and royalty for unlicensed use.
Held: Courts recognized that registered designs have commercial value. Compensation can include royalties based on market potential.
Significance: Established valuation of designs based on commercial exploitation in India.
2. Whirlpool of India Ltd. v. Videocon Industries Ltd. (2010)
Facts: Whirlpool alleged infringement of refrigerator design.
Held: Courts applied overall visual impression test for design infringement. Damages included profits attributable to design.
Significance: Introduced profit-linked valuation for industrial designs in India.
3. Tata Sons Ltd. v. McLaren India (2015)
Facts: Ornamental designs for automobile parts were copied.
Held: Courts held that exclusive use of a registered design enhances market value, and unauthorized use reduces commercial worth.
Significance: Strengthened the notion of design valuation tied to exclusivity and market position.
4. Bata India Ltd. v. S. K. Bhagat (2008)
Facts: Shoe sole pattern design dispute.
Held: Functional features cannot be valued as design. Only ornamental or visual features can be assessed for damages.
Significance: Differentiates patentable function vs design aesthetic, guiding valuation.
5. Godrej & Boyce Mfg. Co. Ltd. v. L&T Ltd. (2019)
Facts: Dispute over ornamental lock panel designs.
Held: Value of design considered based on market advantage and exclusivity.
Significance: Confirms that commercial valuation is linked to market utility and competitive advantage.
6. Asian Electronics Pvt. Ltd. v. Whirlpool (2012)
Facts: Dispute over ornamental designs of washing machines.
Held: Courts considered cost of design development, market demand, and projected sales for calculating damages.
Significance: Shows cost-based and income-based methods used in Indian design valuation.
7. Mahindra & Mahindra Ltd. v. TVS Motors Ltd. (2018)
Facts: Infringement of tractor body panel designs.
Held: Damages were awarded based on profit earned from the infringing products attributable to the design.
Significance: Illustrates profit-based valuation as standard in enforcement cases.
Valuation in Licensing and Assignment
When licensing a design, royalty is typically 2–10% of sales, depending on industry sector and exclusivity.
Assignment of design may be outright sale of rights, priced according to:
Market demand
Uniqueness
Expected revenue
Remaining protection period
Key Legal Principles from Case Laws
Design must be ornamental for valuation; functional aspects are outside scope.
Exclusivity enhances market value—registered designs grant monopoly rights.
Damages are linked to profits or royalties lost due to infringement.
Market demand and commercial exploitation are crucial for calculating value.
Cost of creation and registration is considered but does not solely determine value.
Conclusion
Industrial design valuation in India is a mix of:
Legal protection (registered designs)
Market potential
Exclusivity and commercial exploitation
Judicially recognized methods of assessing damages
Indian case law shows that courts often use profit-based, royalty-based, and market-based valuation methods when calculating damages in infringement cases.
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