Interpretation of S. 124(1)(i) of Trademarks Act, 1999 should not be restricted to only cover cases instituted before filing of the suit but even cases instituted in IPAB, till civil court applies its mind

Punjab and Haryana High Court: A Single-Judge Bench comprisisng of Arun Palli, J. ruled on the interpretation and operation of Section 124 of the Trademarks Act, 1999. The judgment marks a discordant note with  Stokely Van Camp Inc. v. Heinz India Private Ltd., 2012 (52) PTC 540  and a Full Bench decision in Data Infosys Ltd. v. Infosys Technologies Ltd., 2016 (65) PTC 209 (Del).

For ease of reference S. 124 of the Act is hereby extracted:

124. Stay of proceedings where the validity of registration of the trade mark is questioned, etc.—

(1) Where in any suit for infringement of a trade mark—

(a) the defendant pleads that registration of the plaintiff’s trade mark is invalid; or

(b) the defendant raises a defence under clause (e) of sub-section (2) of Section 30 and the plaintiff pleads the invalidity of registration of the defendant’s trade mark, the court trying the suit (hereinafter referred to as the court), shall,—

(i) if any proceedings for rectification of the register in relation to the plaintiff’s or defendant’s trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings;

(ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff’s or defendant’s trade mark is prima facie tenable, 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 party concerned to apply to the Appellate Board for rectification of the register.

(2) If the party concerned proves to the court that he has made any such application as is referred to in clause (b)(ii) of sub-section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings.

(3) If no such application as aforesaid has been made within the time so specified or within such extended time as the court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case.”

The facts giving rise to the dispute are that the plaintiff sought an injunction against the defendant on the ground of violation of his trademark “MOHUN’S” by using the deceptively similar trade mark “MOHAN’S”. The plaintiff instituted the suit on 12/5/2014 and after the defendant entered appearance in the suit, the defendants moved the Intellectual Property Appellate Board (IPAB) on 9/7/2014 challenging the very registration of the trademark of the plaintiff. The fact being that no rectification proceedings were filed by the defendant at the time of the institution of the suit by the plaintiff. However, when the trail court took congnizance of the dispute the IPAB was already in seisin of the proceedings. The defendants then filed a written statement on 19/12/2014 subsequent to which the trial court has stayed the suit until the IPAB resolved the dispute. The plaintiff’s trademark was registered as “MOHUN’S” (upper case ‘S’) (TM No. 396139 dated 7/10/1982) and subsequently registered for enlarged specification of goods under the name of “MOHUN’s” (lower case ‘S’) (TM No. 1741875 dated 10/10/2008) but there were certain conditions imposed upon this registration such as (a) association of the later trademark with the earlier (b) furnishing an NOC from the other partners for the new registration within 30 days.

The plaintiff contends that (a) plea of invalidity of registration of trademark set out by the defendant is abandoned because the procedure set out in S. 124 of the Act has not been followed; (b) the claim of the defendants that the name is not unique is not sound as they themselves have applied for registration of the same name; (c) the plaintiffs are prior users and the defendants have not done due diligence to detect any similar marks existing in the market

The defendants contend that (a) it does not make a difference whether the defendants approached the IPAB pre or prior to the institution of the suit since the right to approach the IPAB would not be contingent on S. 124 of the Act; (b) the trademark of the plaintiff is not valid as “MOHUN’S” is incapable of attaining a distinctive character or has acquired a secondary meaning; (c) the trademark used is bona fide as it has been drawn from the name of the proprietor Man Mohan Sharma. The same is protected by Section 34/5 (the sections defend the validity of the name of the trademark in case it is named after the proprietor himself); (d) the said trademark has not been used by the defendant and ought to be struck off the register under Section 47 of the Act (the section says that limitation to avoid removal from the register is bona fide use of registered good or services within 5 years and 3 months).

The Single Judge allowed the appeal by holding that:

(a) The conditions imposed on the plaintiffs by the registry have not been complied with till date. Further, no amount of usage can make the plaintiff acquire distinctiveness for the name “MOHUN’S”.

(b) An interpretation of S. 124(1)(i) should not be restricted to only cover cases instituted before the institution of the suit but even cases instituted in the IPAB till the precise moment when the civil court applies its mind to the dispute for the first time. The reasoning behind the same can be attributed to the acts which might precede the first time the court takes cognizance, namely (i) service upon defendants (ii) causing an appearance (iii) filing of the written statement. In this case by the time the trial court took cognizance of the dispute for the first time, the IPAB had already seized the matter. Resultantly, the plea of the defendant for invalidity of registration was still alive.

(c) Plaintiff cannot claim a right of exclusive usage viz-a-viz a part of the registered trade mark. There has been no actual usage of the registered mark as “MOHUN’S”. All the invoices furnished are with regard to fruit cakes alone. It is discovered from the record that the plaintiff had misrepresented in the plaint as the earlier registered mark was “MOHUN’S FRUIT CAKE” and not “MOHUN’S”. The suit at hand has been filed under the registered mark of “MOHUN’S” (the alleged earlier registered mark) which could jell well with the claim against “MOHAN’S” (i.e. the registered mark of the defendant). There was no production under the name of “MOHUN’S” and was not separately registered. Thus, the plaintiff could not seek relief on account of a trademark that was only a fragment of the later registered trademark “MOHUN’s”.

(d) The balance of convenience lies in favour of the defendant since he has a continuing business since August 2013 atleast and “MOHAN’S” being a prominent part of his name leads to an injunction in favor of the defendant. [Man Mohan Sharma v. Manjit Singh, FAO No. 4739 of 2016, decided on December 22, 2016]

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