Friday, November 18, 2011

"Stay of a Suit" under the Trade Marks Act

For an Intellectual Property lawyer, developing an understanding of the various IP legislations alone, is insufficient. In fact, a hold over procedural law is just as vital; pertinently, where the two cross paths.

One such instance where this aspect has been brought to the fore, is the decision rendered by the Delhi High Court in The Financial Times v. Bennett and Coleman.

The case, discussing “stay of a suit” under Section 124 of the Trademarks Act, 1999, looked at the “tenability” of a stay when a rectification proceeding is pending. The mark in contention was “FT”, a much popular abbreviation, by which Financial Times is referred.

Noting the facts of the case, the Court affirmed that Bennett and Coleman had a right to contest the inherent non-distinctiveness of a trade mark, (either by filing an application for its rectification under Section 57, citing relevant grounds, or by approaching the Court). This right to contest was termed as sacrosanct, and beyond the scope of interference of any Court.

However, in this case, the defendant chose to move to Court in an infringement suit, in order to assert the invalidity of the FT mark by claiming non-distinctiveness, and consequently to preserve their rights to use the same. Later in the year 2007, they moved an application for rectification.

Further, in the year 2010, the defendant chose to approach the Delhi High Court for stay of the suit under Section 124 of the Trade Marks Act. The Court noted that this move was made close to nine years, post the initiation of the initial infringement suit. Looking at the complicated history behind the pending proceedings, the Court also noted that the issue had been referred to mediation, where it remained pending for close to three years.

The Court taking note of the long pending and complicated course that the case had taken, looked at the “Prima facie tenability” of the suit, and stated:

The Court is also conscious that a blanket acceptance of the defendant’s plea of prima facie tenability of the argument that the letter marks are inherently incapable of distinctiveness would lead to certain unforeseen results especially in cases like the present.”

Further, commenting that staying such a suit, would have a “colouring” effect upon the decision of a Tribunal,the Court stated:

The Court is conscious that this reason cannot be invoked under all circumstances, because Section-124 does empower prima facie examination of tenability. Nevertheless, while exercising that jurisdiction, a fine distinction has to be kept in mind between the nature of “tenability” of such a plea, while considering a temporary injunction motion, and one for stay of suit.”

The beauty of the decision, in my view, is that while the case discusses an aspect, which at first glance seems to have its roots dug deep into the Civil Procedure Code, it has been discussed simply on the basis of facts, with reasoning derived from the impact of a vital provision of the Trade Marks Act, 1999.

In my view, this judgment is a must read for all Trade Mark practitioners!!!

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