Significance of Framing an Issue of Trademark Invalidity under Section 124 of the Trademarks Act, 1999

In the last post, I discussed the purpose and import of framing of issues in a civil suit under Order 14 of the Code of Civil procedure. I took the view that the framing of an issue under Order 14 does not tantamount to the Court taking a position with respect to the contentions of parties on a material question of fact or law. It is a mere act of charting the trajectory and contours of the trial so that the progress of the trial is not waylaid by irrelevant or immaterial issues which have no bearing on the adjudication of the rights and liabilities of the parties. 

The question that I shall address as part of this post is whether there is a difference between the framing of an issue under Order 14 of the CPC and framing of an issue with respect to the invalidity of a trademark registration under Section 124(1)(a or b)(ii) of the Trademarks Act, 1999. Under the said provision of the Trademarks Act, one of the condition precedents for the grant of a stay on a suit for trademark infringement is that a Court must form a prima facie opinion that a party’s contention regarding the invalidity of the other party’s trademark registration is tenable. Should such an opinion be formed, the Court shall raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the challenging party to apply to the IPAB for rectification/removal of the registered trademark.

This brings out the first distinction between an issue framed under Order 14 of the CPC and an issue framed under Section 124 of the Trademarks Act. While an issue under Order 14 is framed to merely identify material propositions of law or fact on which the parties differ so that the suit may be determined, an issue framed under Section 124 goes a step further because it requires the Court to form a prima facie opinion of the tenability of the contention of trademark invalidity. In other words, while under Order 14 a Court need not and cannot express its prima facie opinion on the strength of the parties’ contentions, it must necessarily do so under Section 124 on the question of trademark invalidity.

Secondly, it follows that in forming such a prima facie opinion under Section 124, the Court has to give reasons for holding in favour of either party, which is the settled law with respect to the standard of reasoning expected from prima facie findings. Although the Delhi High Court in its Full Bench decision in Data Infosys v. Infosys Technologies does not expressly endorse this view, a reading of Paragraphs 31 and 32 of the judgement reflects the Court’s implicit endorsement of the need for reasoning in assessing tenability.

Thirdly, while under Order 14 issues are framed when the stage arrives, an issue under Section 124 may be framed even before the stage of framing of issues for trial. This has been clarified by the Delhi High Court in Data Infosys. Extracted below is the relevant excerpt from Paragraph 31 of the judgement:

"31......The court is of the opinion that Parliamentary intendment is clear that if at the stage of filing of the suit, a rectification application is "pending" before IPAB, there is no choice for the court, but to adjourn the infringement suit. However, if no such application is pending, the court which is later approached with an infringement suit (which "tries" it) has to appraise prima facie tenability of the invalidity plea, whenever taken. It could be urged even by way of amendment. Nevertheless, there cannot be an automatic stay, in view of the express phraseology of Section 124 (1) (ii) which mandates exercise of discretion. To postpone the consideration at the stage of framing issues would be a narrow interpretation, undermining the broad basic distinction between the two contingencies envisioned by Section 124 (1) (b).

Finally, the consequence of an issue framed under Order 14 is vastly different from that of an issue framed under Section 124. While an issue under the former merely captures an aspect of the dispute on which evidence must be led by the parties in trial and judgement must be pronounced by the Court ultimately, an issue under Section 124 decides the very progress of the suit since if the Court does frame an issue of invalidity post a prima facie analysis, the inevitable consequence is a stay on the suit for infringement (unless the party challenging the trademark registration fails to approach the IPAB for rectification within three months from the framing of the issue).

Therefore, it is evident that not only is the object of Order 14 different from that of Section 124, the standard and rigour of analysis called for under the latter is significantly higher than the former.

In the next post, I will discuss a few more aspects of Section 124.