Background
Under the Trade Marks Act, 1999 (“Act”), when a suit for infringement is filed by the plaintiff based on its registered trademark, the defendant is entitled to plead that the registration of the plaintiff’s trademark is invalid. This is because there could be situations, where the defendant may not be aware of the registration of the plaintiff’s trademark on account of an oversight, omission, or failure/error in the advertisement of the plaintiff’s application for registration of its trademark. Even if the defendant were aware of such registration of the plaintiff’s trademark before the suit for infringement is filed, he may choose not to initiate proceedings under the Act before the Registrar/ Intellectual Property Appellate Board (“IPAB”), and may await action by the plaintiff to enforce its rights accruing from the registration of its trademark by making the first move by filing suit for infringement of its trademark.
In the aforesaid background, a question arises that during the pendency of suit of trade mark infringement in the civil court, if a party to the suit wanted to file an application for rectification of register of trade mark with the IPAB against the other party, then whether the permission of the Court was required under section 124 of the Act?
The clause which has generated the debate over the aforesaid substantial question of law is clause (ii) after clause (b) of Section 124(1) of the Act which deals with a situation where – even though one of the parties to the suit has raised a plea of invalidity of the registered trademark of the opposite party, he has not initiated proceedings for rectification of the Register of trade mark (before the IPAB) in relation to the said trademark, when consideration by the Court on the aspect of Section 124 takes place. When the Court takes notice of the said plea of invalidity, and finds that the party setting up such a plea has not initiated action for rectification of the Register of Trade Marks before the IPAB despite taking such a plea, the Court would examine whether such a plea of invalidity is, prima-facie, tenable. Upon finding the plea of invalidity of the registered trademark to be, prima facie, tenable, the Court would order for adjournment of the proceedings in the suit by a period of three months. The purpose of this adjournment is that, before proceeding is initiated under Section 47 or 57 of the Act by the concerned party before the IPAB, the suit does not proceed, and during the said period of three months (or such extended period, as the Court may allow), the party raising the plea of invalidity could approach the IPAB under Section 47/57 of the Act.
A Full Bench of the Delhi High Court (in its recent judgment given on February 5, 2016 in the case of Data Infosys Ltd v. Infosys Technologies Ltd) was called upon to decide on the aforesaid question. It held that IPAB has exclusive jurisdiction to consider and decide upon the merits of a plea of trademark registration invalidity as per Section 47 and 57 of the Act and access to IPAB was not dependent on the civil court’s prima facie assessment of tenability of a plea of invalidity of trademark registration. In other words, the Court held that section 124 of the Act did not control the choice of a litigant to seek rectification of a registered trademark.
The aforesaid judgment is significant in background of there being no authoritative decision (i.e. the Honourable Supreme Court’s decision) on this issue and secondly it overrules the Division Bench judgment of the same Court.
Facts of the Case
Infosys Technologies Limited (hereafter referred to as “Infosys”) sued Data Infosys Limited (hereafter called “Data Infosys”) and claimed permanent injunction against infringement of its registered trademarks “Infosys” and allied marks.
During the pendency of the suit, the application of Data Infosys for registration of its mark “Data Infosys” was accepted and its registration was granted in class 9, 38, 42 i.e. telecommunication, communication by computer, by fibre, electronic transmission of voice, computer hardware etc.
Infosys sought rectification of the registered trademark “Data Infosys” under Classes 38, 9 and 42 before the IPAB. 2.4 Upon becoming aware of these proceedings, Data Infosys alleged that the initial filing of rectification proceedings without seeking leave of the Court constituted an abuse of process and the same were, therefore, null and void.
Question which was required to be decided by the Court
In case of a suit of trade mark infringement, whether prior permission of the Court was necessary under Section 124(1)(b)(ii) of the Act for rectification of a registered trademark, during the pendency of the suit?
Applicable Legal Provisions
Section 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 defense 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 plaintiffs 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 IPAB for rectification of the register. [Underlining is supplied for emphasized]
(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 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.
(4) The final order made in any rectification proceedings referred to in sub-section (1) or sub-section (2) shall be binding upon the parties and the court shall dispose of the suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark. [Underlining is supplied for emphasized]
(5) The stay of a suit for the infringement of a trade mark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction directing account to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit.”
Arguments of Data Infosys
Placing reliance on some decisions, inter alia the judgment given by the Single Judge of the Delhi High Court (which was affirmed by the Division Bench) in the case of Astrazeneca UK Ltd. and Anr. vs. Orchid Chemicals and Pharmaceuticals Ltd2, it was argued that the proceedings for rectification of the defendant’s mark cannot be initiated without the prima facie satisfaction of the plea by the Court of the invalidity of the registration of the trade mark and that the suit cannot be adjourned or stayed in terms of Section 124(1)(b)(ii) of the Act to await the outcome of the rectification proceedings initiated by the plaintiff before the IPAB – if the procedure outlined under the said section is not followed.
The principal objective of Section 124 was to avoid conflicting decisions as to the validity of the registered trademarks. Section 124(1)(a)(i) – first limb of the provision-merely mandates a stay of suit if a rectification petition is pending at the time. However, if no rectification is pending, the latter part, i.e. Section 124(1)(a)(ii) operates and obliges the litigant seeking deferment of the suit proceedings to scrupulously follow the procedure, applying to the Court and satisfying it that prima facie the plea is tenable. Upon the Court being satisfied with respect to the tenability of the plea an issue has to be framed and the suit adjourned. The applicant seeking to rely on the plea of invalidity then has to approach the IPAB within three months. The ruling given by the IPAB becomes binding. This mechanism, i.e. Section 124(1)(a)(ii) is to be seen as a mandatory step to ensure that litigants do not frustrate an infringement proceeding or trial in a suit.
The important underlying purpose of section 124(1)(a)(ii)was to ensure that the discipline of approaching the IPAB only with the permission of the Court is an essential safeguard for the litigants who might be otherwise directly approaching the IPAB and thwart the infringement action which can independently proceed in terms of Section 125.
Arguments of Infosys
The Division Bench ruling in Astrazeneca UK Ltd.(supra) and the other judgments of the Court, in their interpretation of Section 124(1)(b), had overlooked a salient and important aspect, namely that the prima facie view of the Court in regard to tenability of a trademark invalidity plea is not to enable it to move the IPAB for rectification of a registered trademark during pendency of the suit, but only for the purpose seeking stay of the suit. As a consequence of the court holding that the invalidity of the mark is not prima facie tenable, is limited, only for the purpose mentioned in Section 124, i.e. there would not be a stay of the suit.
It was argued that if the party seeking rectification did not obtain a favourable ruling of the Court under Section 124(1)(b)(ii) or obtains prima facie view of the invalidity plea being tenable and yet does not avail of it, (or does not avail of the plea by applying to the IPAB within the time granted) the only result can be its abandonment or inability to set-up the invalidity of the mark as a defence in the suit. It does not oust the jurisdiction of the IPAB, which is the sole statutory body charged with the duty of considering the validity of the mark.
The constitution, powers and functions of the IPAB have been independently dealt with in separate provisions of the Act, i.e. Sections 57 (power to cancel or vary registration and to rectify the register) and 47 (removal for register and imposition of limitations on grounds of non-use). There is no bar to indicate an embargo on the powers of the Board, i.e. IPAB – or the Registrar (who has concurrent powers with the IPAB under those provisions) from examining the validity of a registered trademark in the absence of the Court’s prima facie satisfaction in the pending suit.
IPAB was vested with the exclusive authority to examine the validity of registered trademarks and its jurisdiction cannot be ousted and its authority reduced or curtailed or subordinated to that of the Civil Court in the manner suggested by the defendant. Had such been the case, the Parliament would have been more express in its articulation. Section 124(1)(b)(ii) only enables the Court to take a prima facie view but ultimately the decision about the validity of the mark is that of the IPAB alone; it cannot be questioned or put in issue in civil suit later.
Relying upon the decision of the Division Bench judgment of the Madras High Court in the case of B. Mohamed Yousuff v. Prabha Singh Jaswant Singh and Ors3 , it was argued by Infosys that the requirements of “raising an issue”, “adjourning the case” and a “prima facie satisfaction” as spelt out in Section124(1)(b)(ii) should be read as the requirements for the grant of a stay of the suit and not as a requirement or pre-condition for filing an application for rectification.
Judgment of the Court
The Court agreed with the interpretation by Infosys of section 124(1)(b)(ii) of the Act and held that the effect of prima facie evaluation-one way or another, of the tenability of the plea of invalidity of registration of trade mark, does not impinge on the right of the party raising such a plea to apply to the IPAB for rectification. Even where the Court, prima facie, says that the plea of invalidity is not tenable, the party setting up such a plea is not precluded from preferring a rectification application before the IPAB.
The jurisdiction of the Civil Court (trying the issue of infringement), under Section124(1)(ii) extends only to examining the prima facie tenability of the invalidity plea for the limited purpose of examining whether to adjourn the suit, or not, for a period of three months to enable the party setting up the plea of invalidity to prefer rectification proceedings before the IPAB under Section 47/57 of the Act. On the other hand, the statutorily created body of exclusive jurisdiction, i.e. the IPAB is not so constrained; rather, it has the duty and the jurisdiction to examine and deal with the merits of the plea of invalidity of the registration (of a trademark) based on all the materials placed before it.
The IPAB is solely charged with the duty of examining the plea of invalidity of a registered trademark. Its decision, and that of no other court or body, can lead to the striking off or retention of a mark on the register. It oversees the decisions of the Registrar and has appellate powers in all such matters. The grounds for invalidating a mark, or deciding a plea of invalidity, are spelt out in Sections 47, 57 and some other related provisions; the IPAB is the only judicial forum charged with the jurisdiction of deciding upon those issues; any decision on those issues, on the merits, by a court or another body (other than Registrar who too has concurrent primary jurisdiction, except in the manner provided by Section 125) would result in a decision that is coram non judice.
Where special rights are created by a statute, which provides a mechanism for the enforcement of such statutory rights then, even in the absence of an express exclusion, the civil court’s jurisdiction over those matters is barred. In respect of matters relating to invalidity of registration of a trademark, the jurisdiction to decide the merit of the dispute is exclusively that of the statutory authorities-i.e. the Registrar or the IPAB; in the event of such dispute being raised after the filing of an infringement suit, it is exclusively that of the IPAB. The civil court’s jurisdiction to go into the merits of the plea of invalidity is therefore bared.
The structure of Section 124 nowhere indicates that jurisdiction of IPAB (where an invalidity plea is urged in, or after filing of suit) is conditional upon the civil court’s determination of the prima facie tenability of the invalidity plea. Further, there is nothing in Section 124(1) or 124(2) to suggest that either the plaintiff, or the defendant is precluded from moving an application before the Registrar/IPAB under Section 47 or 57 of the Act for removal/rectification of the registered trademark of the opposite party at any point of time, i.e. before, or after the filing of the suit for infringement by the plaintiff, or before or after the filing of the written statement by the defendant.
Where the civil court based on its prima facie assessment states the invalidity plea is not tenable or where the litigant does not approach the IPAB within the time granted (i.e. when the court holds the plea to be prima facie tenable) the only consequence is deemed abandonment of the invalidity defense in the infringement suit. However, access to IPAB to invoke its exclusive jurisdiction to test the invalidity of a trademark registration is not precluded or barred in any manner whatsoever.
The Court concurred with the judgment rendered by the Madras High Court in the case of B. Mohamed Yousuff (supra) and overruled judgment of the Delhi High Court given in the case of Astrazeneca UK Ltd (supra) and all other judgments which held that the plea of rectification can be raised by a party to an infringement suit, only if the court trying the suit, rules it to be prima facie tenable and that if such finding is not recorded, the party cannot avail the remedy of rectification of a registered trademark.
IPAB has exclusive jurisdiction to consider and decide upon the merits of a plea of trademark registration invalidity – applying Section 47 and57 of the Act – in the context of an infringement suit based on such registered trademark. Access to IPAB is not dependent on the civil court’s prima facie assessment of tenability of a plea of invalidity of trademark registration. In other words, Section 124 of the Trademarks Act does not control the choice of a litigant to seek rectification of a registered trademark.
By majority judgment (i.e. one judge dissenting on the point), the Court held that if there is no application for rectification before the IPAB when the suit is filed and a party to the infringement suit, wishes to challenge it after the filing of the suit, it may do so, but the court has to assesses the tenability of the invalidity plea – if it finds it prima facie tenable, then and then alone, would it stay the suit to enable the party to approach the IPAB within a time period. If the party does not avail of this, or approaches the IPAB after the period given, the court would proceed with the suit; the plea of invalidity is deemed abandoned in the infringement suit.
Analysis & Comments
The judgment positively acknowledges the exclusive powers of the IPAB for deciding on applications for rectification of Register of Trade Marks even when a suit of trade marks infringement suit is pending in the civil court.
One interesting aspect, however, was pointed out by the learned Judge Vipin Sanghi (and which was differed from the other two learned judges) of a situation where a plea of invalidity of registration of trade marks is raised by a party to the infringement suit and the Court prima facie finds that such plea is not tenable, then will it lead to continuation of the infringement suit (i.e. no stay order being granted) and consequential abandonment of plea of invalidity of registration? In this regard, he pointed out as under:
Neither clause (ii) of Section 124, nor any other provisions of the Act says or suggests that such prima facie evaluation by the Court would, by itself, form the basis of a final judgment by the Court. The decision of the Registrar/IPAB on the issue/plea of invalidity of the registered trademark would bind the Court. Therefore, unless and until the plea of invalidity of the registered trademark is withdrawn, abandoned, or deemed to be abandoned in the suit, the subsistence of the said plea, and the issue premised on the said plea, would become a stumbling block for the Court to decide the suit, as a decision/judgment in the suit must necessarily deal with all issues arising in the suit. In fact, the decision on the said issue of invalidity of the registered trademark may be central to the decision in the suit. Thus, the Court would not be able to finally decide the suit.
Till the Court is satisfied that the plea of invalidity of the registered trademark has been withdrawn, expressly abandoned, or deemed to be abandoned [by virtue of Section 124(3)], the Court would not be in a position to render judgment in the suit. The Court would, necessarily, have to await the determination made by the IPAB on the issue of validity or invalidity of the registered trademark in question, and rely on the said determination of the IPAB in its final judgment. Therefore, a mere prima facie finding by the Court that the plea of invalidity of the registered trademark is not tenable, would not lead to “abandonment” of the said plea of invalidity as, abandonment can take place only upon either a conscious act or omission of the concerned party, and not because the Court prima facie does not find the plea of invalidity to be tenable.
About Bulwark Solicitors
Bulwark Solicitors is a law firm pioneered by Solicitor Chirag Sancheti and Advocate Deep Shridharani. The firm has expertise in the areas of both Litigation and non-Litigation. Under the non-litigation Law practice, the firm practices in the areas of Corporate Law, Intellectual Property Law, Bankruptcy & Insolvency Law, Competition Law, Real Estate and Conveyancing and DTAA Advisory. Further, under Corporate Law area, we practice Company Law, Securities Law, Mergers and Amalgamations, Private Equity and Venture Capital Investment Transactions, Legal Due Diligence and Foreign Exchange Management Law.