Monday, May 12, 2014

Division Bench of the Delhi High Court Holds a Registered TM Owner can sue another Registered Owner for Infringement

On April 29, 2014, in a Regular First Appeal (RFA) preferred against the rejection of a plaint by the Court of first instance under Order 7, Rule 11 of the CPC, a Division Bench of the Delhi High Court held that an action for infringement by one registered proprietor of a trademark against another registered proprietor is maintainable under the Trademark Act, 1999, subject to the conditions under Section 124 of the Act being satisfied.

In the facts of the case, both the Plaintiff and the Defendant had registrations on the mark "HERITAGE" in Class 30. The appeal was preferred by the Plaintiff against the order of the Learned Single Judge who held that Section 28(3) of the Act prohibited a registered proprietor of a trademark from suing another registered proprietor. In other words, according to the Learned Single Judge, the only cause of action that a registered owner may have against another registered owner is that of passing off, but not infringement. 

This proposition was rejected by the Division Bench in light of Section 124(1)(b) of the Act which clearly refers to a situation where a suit for infringement is filed by a registered TM owner against another. To this end, the Division Bench cited the decision of the High Court in Clinique Laboratories LLC and Anr. Vs. Gufic  Ltd. and Anr. (April 9, 2009) in which after a detailed discussion on Sections 28(3), 30(2)(e) and 124(1)(b) of the Act, it was held that a suit for infringement by a registered TM owner is indeed maintainable against another registered TM owner. In fact, it was further held that Section 124(5) permits the grant of an interim injunction as well in such a suit for infringement.

Extracted below are the relevant observations from the Clinique decision which was subsequently applied in Mrs.Rajnish Aggarwal & Ors. v. M/s Anantam and most recently in Abbott Healthcare v. Raj Kumar Prasad on April 25, 2014:

8. In my view, Section 29 of the Act providing for infringement of the registered trademark does not contemplate infringement by another registered proprietor. Sections 29(1), (2) & (4) expressly provide that "registered trademark is infringed by a person who, not being a registered proprietor ..........." Though, Section 29(5) which has been newly introduced in the 1999 Act does not use the same language but in my view the same would be irrelevant for the present purposes. Section 30 (2) (e) further fortifies the said position by expressly providing that the registered trademark is not infringed where the use being as one of two or more trademarks registered under the Act which are identical or nearly resemble each other and in exercise of the right to use of that trademark given by registration thereof. However, Sections 28(3), 29 & 30(2) (e) cannot be read in isolation. If the intent was that there could be no action for infringement against the registered proprietor, the legislature while giving the right for rectification before the Registrar would not have in Section 31 made the registration as only prima-facie evidence of validity thereof. If that had been the intention all that would have been said is that as long as the registration exists it is valid, without any question of prima-facie or not. Then the courts would have had to wait for the outcome of the rectification proceedings.

9. Registration has been made only prima-facie evidence of the registration otherwise being in accordance with the Act under Section 31(1) as contended by senior counsel for plaintiff but I find that even Section 28 (1) while being subject to other provisions of Act, further provides that "registration of the trademark, if valid, give to the registered proprietor" exclusive right to use the trademark. Thus the validity of registration can be gone into, wherever permissible under the Act. Section 124(1) (b) also indicates that it was within the contemplation of the legislature that there could be a suit for infringement of trademark where the defendant takes a plea under Section 30 (2) (e) i.e. that use by him is not infringement because of his mark being also registered. The legislature while further providing for stay of suit in such cases, in sub Section (5) expressly provided that such stay would not preclude the court from making any interlocutory order. Section 31 r/w the scheme of 124 leads to an un-escapable conclusion that (A) there can be a suit for infringement against the registered proprietor (B) that upon the defendant taking the plea of his registration and of there being thus no infringement, such suit has to be stayed awaiting the rectification proceedings and (C) the court is empowered in such case to pass any interlocutory order. The court while passing interlocutory order will necessarily have to prima facie adjudicate the validity of the two competing registrations. Upon inquiry, it was informed that the Registrar while trying the rectification application has no power to grant interim relief. The legislature under Section 124 (5) has thus empowered the court under Section 124 (5) to grant injunction against use of a registered trademark also if the court is satisfied of the invalidity thereof. Though in view of Section 31, the test would be much stricter;

10. In my opinion, unless the provisions are so read, effect cannot be given thereto.

11. Once having reached a conclusion that registration is only prima facie evidence of validity, it is axiomatic that if the court is satisfied otherwise on the basis of material on record and in the facts of the case, the court is empowered to injunct use of registered trademark also. I do not find any reason to limit/restrict the applicability of sub Section (5) as suggested by the senior counsel for the defendant, in the absence of the legislature providing so. If the legislature had felt that there could be no infringement by a registered trademark, there was no need to provide for such a suit as in Section 124 (1) (b) and (i). In fact, sub-clause (i) of 124 (1) shows that the suit can be instituted even where the rectification proceedings are pending i.e. where the plaintiff is even at the time of institution of the suit aware of the defendant having a registered trademark.

12. I also find merit in the contention of the senior counsel for the plaintiff with reference to Section 31 (2) of the Act. Section 31 (2) suggests that the court notwithstanding registration being prima- facie evidence of validity as provided in Section 31(1) can hold the registered trademark to be invalid. The court can hold the registration to be invalid, on any ground or for non compliance of any of the conditions for registration provided under the Act. It further provides that if the invalidity of registration is averred for the reason of non compliance of Section 9 (1), i.e. of evidence of distinctiveness having not been submitted before the Registrar, then the party pleading validity of registration shall be entitled to give evidence in legal proceedings where validity is challenged, of the mark having acquired distinctiveness on date of registration. Section 32 permits evidence of acquisition of distinctive character within the meaning of Section 9(1) post registration, also being led in such proceedings. It follows that where validity of registration is challenged on grounds other than provided in Section 9(1) of the Act, the test is whether the criteria laid down in such other provisions of the Act, for registration has been satisfied or not. Since, Section 124 otherwise provides for stay of proceedings in such suit and only permits passing an interlocutory order, such finding of invalidity naturally has to be on the touchstone of principles for interlocutory order only and not as at the time of final decision of the suit, in as much as the finding in the rectification proceedings has been otherwise made binding in the suit and on all aspects of validity i.e. under Section 9 as well as under Section 11.

13. Neither counsel has cited any direct judgment on this aspect. Nor have I been able to find any.

14. I thus conclude that a suit for infringement of registered trademark is maintainable against another registered proprietor of identical or similar trademark and in such suit, while staying the further proceedings pending decision of the registrar on rectification, an interim order including of injunction restraining the use of the registered trademark by the defendant can be made by the court, if the court is prima facie convinced of invalidity of registration of the defendants mark.”

Therefore, from the above, it is clear that so long as the validity of the defendant’s trademark registration has been challenged either prior to the institution of the suit, or such a challenge has been raised in the plaint by the plaintiff who is also a registered TM owner, a suit for infringement by a registered TM owner is maintainable against another registered TM owner.

No comments:

Post a Comment