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Regulation of Bitcoins/Digital Currency in India by Roma Bhojani

The Government of India has been deliberating on formally legalising digital currency or cryptocurrency such as Bitcoins in India. In March 2017, the Ministry of Finance set up an intergovernmental committee with a mandate to research and create a framework for regulation of digital currency in India. In July 2017, the Supreme Court directed the government and the Reserve Bank of India to submit information on steps which have been taken to ensure that digital currency will not be used for terror financing, money laundering or other illegal activities. There is currently no law regulating digital currency in India, and it has not been explicitly declared as legal or illegal.
Japan legalized digital currency in March 2017 and this led to a boom in the price and sale of Bitcoins. Even the central bank of China has already developed a prototype of a digital currency that it might circulate shortly. China will be conducting mock transactions involving digital currency by simulating possible situations, to analyse the issues which could arise by legalizing digital currency.

Proponents of digital currency believe that India is currently at an ideal place to launch legal digital currency due to many reasons. The Prime Minister Narendra Modi has been trying to popularize the idea of ‘Digital India’ since 2015 by encouraging improvement of digital infrastructure and internet connectivity. The government has been carrying out campaigns to open bank accounts for all citizens. Despite these efforts, millions of people in India do not have bank accounts. It is believed that improving this situation is an extremely difficult task due to lack of formal banking infrastructure. Digital currency could provide an online banking solution to those who are not a part of the formal banking framework as it will only require access to internet and no elaborate infrastructure. Furthermore, the process of accessing digital currency is less tedious than the process of opening a bank account as the latter requires submission of various documents, permanent address proofs, etc.

If digital currency is legalised in India then it would fall under the regulatory framework of currency in India. This means that it would presumably fall under the purview of Reserve Bank of India (RBI) Act, 1934. This means that the RBI would have the power to issue guidelines to regulate investment in digital currencies and their sale. Furthermore, the government will be able to tax the returns on investment from all types of digital currency. Moreover, foreign payments made using digital currency will be considered under the Foreign Exchange Management Act (FEMA), 1999. This regulation and control by the RBI and government would be helpful in countering the security risks associated with digital currency and encourage foreign investment in this currency in India. Another advantage of digital currency is that it would be an easier method for Indian citizens abroad to send small remittances back to their family India. Furthermore, sending remittances through Bitcoins would save fees paid to third parties amounting to billions, and this would be highly beneficial to India as it is one of the world’s largest remittance market.

The Bitcoin industry is already massive in India. The demonetization policy in 2016 resulted in the country experiencing a Bitcoin boom. It resulted in the formation of new Bitcoin startups and due to an increase in demand, a large premium was charged on the Bitcoin prices. Even the ‘Digital India’ policy encouraged Bitcoin investors in India. According to a BitConnect report, India has over 1 million Bitcoin users. Legalizing digital currency in India will further lead to increase trading volumes and activities involving this currency.
Thus, legalizing digital currency appears to be the right step for India.
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Weekly Note
by Priya Garg

Recently, Mumbai’s Taj Mahal Palace Hotel (‘Hotel’) has been trademarked for its architectural design. Since it is the first building in India whose architecture has been trademarked, there have been discussions regarding the possible implications of this move under the Trade Marks Act, 1999 (‘the Act’). The implications need to be understood in light of the major objectives that trademark law seeks to achieve and the broad rights it thereby grants to trademark owners.

The primary aim of the trademark law is to safeguard consumers’ and the trademark owner’s interests simultaneously, by ensuring that the usage of a mark by someone on his product is not done so as to ‘deceive’ consumers about the ‘origin’ of the product. Resultantly, even if ‘similar’ (and not ‘identical’) mark is used, even for commercial purposes, in relation to similar or identical category of products for which a trademark has already been registered, action still cannot be taken under trademark law if the usage does not ‘deceive’ public about the product’s actual origins.

This is the reason that trademarking the architectural design of the Hotel should not bar tourists, professional photographers, etc. from clicking, preserving or/and publishing its snapshots without obtaining a prior consent from the trademark owner, unless this is done in a manner that this causes confusion among public regarding the ‘origins’ of the photograph. Similarly, trade-marking the architectural design of the Hotel would not ipso facto prevent government authorities or private tourist agencies etc. from using the Hotel’s pictures in the backdrop while advertising. This is because such usages of the Hotel’s image are ordinarily not likely to make the consumers mistaken the origin of those products in relation to which the Hotel’s picture is used to that of the original trademark owner of the Hotel’s architectural design. In fact, these issues such as the right to photograph an architectural design, or to publish such photographs, or to use the picture of an architectural design in posters, merchandise etc. come under the ambit of Copyright law instead of falling under the parlance of trademark law.
However, Sections 29(4) and 29(8) of the Act deal with the ‘principle of dilution’ (which prevents the usage of a mark in a manner which may dilute the goodwill of an existing registered trademark); and the latter provision also safeguards the trademark owners against the unfair commercial practice resorted to by anyone in relation to the registered trade mark. The possible effect these two provisions can have on an architectural design being trademarked actually depends upon the attitude that courts choose to adopt in interpretation of Sections 29(4) and 29(8). It may be possible that courts may interpret the usage of the Hotel’s picture in a wall-painting or on a cloth etc. as an act likely to harm the goodwill of the trademark even when such usage does not result in deception regarding the product’s origins. Therefore, the implications of the existence of right against dilution and gaining of unfair commercial advantage remains a grey area. It remains to be seen how widely or narrowly the courts choose to interpret the ambit of this type of right granted to trademark owners, specifically in relation to the architectural designs that are trademarked.
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