India – Flashback 2017 – Supreme Court Of India On Trademark Jurisprudence.

22 February, 2018

 

The year 2017 has been instrumental in shaping the evolving IP Jurisprudence in India, with the Hon’ble Supreme Court having decided and heard several matters inter alia pertaining to the Trade Marks Law. Under this article, we have covered four important judgments which bring more clarity on trademark jurisprudence in India.      

 

Significance of documentary evidence in determining Trans-Border Reputation

 

The Apex court’s decision of December 14, 2017 in the case of Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd & Ors affirming the decision of the Division Bench of the Delhi High Court confirms the trend of ‘territoriality’ over ‘universality’ in the case of a passing off action.

 

The Hon’ble Supreme Court noticed that though Toyota had used the mark PRIUS first in the world in 1997, it was able to use the mark in India only in the year 2010 and had filed an application for its registration in 2009 on a “proposed to be used” basis. Whereas, Prius Auto Industries had been using the mark in India since the year 2001 in respect of automobile parts and accessories and had obtained trademark registration in 2002. The existence of trans-border reputation in India for the mark PRIUS before the relevant date (i.e. in 2001 when Prius Auto Industries started using the mark) needed to be established, which was lacking in this case owing to ‘scanty’ evidence. Due to lack of internet connectivity in 1997 and the fact that only two news items were published in India qua Toyota’s launch of its PRIUS brand of cars in Japan, the same could not be considered as sufficient evidence to support the existence reputation in India.

 

This decision tells the story of an evolving IP jurisprudence in India which not only redefines trans-border reputation but also shows that IP jurisprudence manifests in sync with the business environment, and the changing economic landscape of India and associated policies. In the last couple of decades we witnessed the Indian judicial system adopting an approach that was aimed to develop a level playing field for foreign brand owners, who could not do business in India up till 1991 due to policy restrictions. In cases involving subsequent adoption of internationally used trade marks by Indian businesses, most of the decisions suggested presumption of bad faith on part of the defendants; rather than relying on a thorough inquiry, scrutiny and appreciation of evidence led by both the parties. This decision of the Apex court sets a new standard for testing of evidence to claim trans-border reputation in India. The decision relies on thorough inquiry and appreciation of relevant evidence to determine who has better rights or whether a case of passing off is made out on the basis of prior adoption in another jurisdiction, alleged trans-border reputation in India and/or ‘well-known’ nature of the mark.

 

Prior use prevails yet again in matters of trademark opposition and registration

 

The dispute between Royal Orchid Hotels (“Petitioner”) and Kamat Hotels (“Respondent”), which commenced as opposition proceedings before the Trade Marks Registry has finally come to an end after the Supreme Court recently dismissed the Special Leave Petition in favour of Kamat Hotels in a case revolving around the trademark ‘ORCHID’.

 

The Deputy Registrar rejected the Petitioner’s applications for registration of the marks ‘ROYAL ORCHID’ and ‘ROYAL ORCHID HOTELS’ in class 42. The Registrar, after a careful consideration of the evidence submitted, concluded that the Respondent was prior user of the mark ‘ORCHID’, and since ‘ORCHID’ is the only registrable part of the Petitioner’s trademarks, the rival marks are confusingly similar. The Registrar also held that the Respondent’s mark ORCHID has become ‘well-known’ and the Petitioner’s marks have been dishonestly adopted.

 

Later, IPAB reversed the order of the Deputy Registrar on two grounds. Firstly, it observed that although the Respondent has claimed use of its mark ORCHID since 1997, the Registrar of Companies had given his approval for the name of the Petitioner’s company ‘Royal Orchid Hotels Private Limited’ in 1996. Thus, it cannot be said that the adoption of the Petitioner’s mark is dishonest. Secondly, on the premise of ‘anti-dissection rule’, the Petitioner’s marks were held to be dissimilar to the Respondent’s mark ‘ORCHID’. It was held that since the class of consumers would be of high income group, any chance of confusion between the rival marks is unlikely.

 

Thereafter, the Respondent approached the Madras High Court by instituting a writ claiming that the Petitioner has merely added the descriptive word ‘ROYAL’ to its trademark ‘ORCHID’. The well-reasoned judgment of the High Court brought another twist in the case, wherein the court took into account all the factors including the fact that the Petitioner has acquired registration for its marks in class 16. Although it was clarified that the adoption of the Petitioner’s marks is honest, the two issues of prior use and likelihood of confusion were decided in favour of the Respondent. It was held that although the Petitioner’s company was incorporated in 1997, it commenced its business in the year 2001. Also, it was opined that the fact that the target consumers belong to high income group cannot be taken as a general proposition as each individual would have different mind-set to a particular factual situation. Thus, IPAB’s order was set aside.

 

Finally, the Apex Court reaffirmed the views taken by the High Court and dismissed the Special Leave Petition in favour of the Respondent.

  

No parallel recourse where validity of registration of trademark has been questioned in an infringement suit 

 

In the year 2017, the Supreme Court has provided much desired clarification with respect to Section 124 of the Trademarks Act in the case titled Patel Field Marshall vs. P.M. Diesel. The Apex court was faced with the question whether rectification of registered trademark under section 47/57 of the Act can still be availed where an infringement suit is pending wherein the issue of validity of the registration has been raised either by the plaintiff or the defendant and no issue on the said question of validity has been framed in the suit or if framed has not been trailed by the concerned party by filing a rectification application to the Tribunal/IPAB.

 

It is settled law that the issues relating to and connected with the validity of registration has to be dealt with by the Tribunal and not by the civil court. In cases where the parties have not approached the civil court, the provision of Section 47 and 57 provide an independent statutory right to an aggrieved party to seek rectification of a trade mark. However, in the event the Civil Court is approached and parties have raised the issue of invalidity of the trade mark such plea will be decided not by the civil court but by the IPAB. The Court noted that the Tribunal will however come into picture only if the Civil Court is satisfied that an issue with regard to invalidity ought to be framed in the suit. Once an issue to the said effect is framed, the matter will have to go to the Tribunal and the decision of the Tribunal will thereafter bind the Civil Court. If despite the order of the civil court the parties do not approach the Tribunal for rectification, the Court held that the plea with regard to rectification will no longer survive. The Apex Court held that if an aggrieved party does not approach the Tribunal for a decision on the issue of invalidity of registration, the right to raise the issue of invalidity would no longer survive between the parties to enable the concerned party to seek enforcement of the same by recourse to or by a separate action under the provisions of Section 47/57of the Act.

 

Furthermore, in a situation where the Civil Court does not find a triable issue on the plea of invalidity the remedy of an aggrieved party would not be to move under Sections 47/57 of the Act but to challenge the order of the Civil Court in appeal. 

 

Upholding the Sanctity of a Uniform Process for Speedy Dispensation of Justice and Consequent Creation of New High Court Rules

 

A Special Leave Petition was filed before the Hon’ble Supreme Court of India against the interim order passed by the Delhi High Court in a passing off case of AZ Tech v. Intex technologies. The Supreme Court directed the Delhi High Court to expeditiously dispose of the matter and declined to interfere on the interim order passed by Delhi high Court. It was observed by the Apex Court that the interim order was virtually a decision on merits of the suit. The Court noted that writing an exhaustive judgment at interim stage which would govern the parties for a long duration of time while disposal of the main suit can take years, is a “disturbing trend”.

 

The Supreme Court took suo motu cognizance of the pendency of civil suits and particularly those of IPR in Delhi High Court and directed the Registrar General to submit periodic reports on steps being taken to address the issue of pendency. The Supreme Court encouraged Delhi High Court to come up with effective ways or means to dispose of IPR cases so that such model can be identified and implemented to comprehensively deal with the issue of pendency, in Courts across the country.

       

Further, as a part of a periodic report, Delhi High Court proposed framing of a new set of Rules and the draft rules were also placed before Supreme Court which was later notified as the Delhi High Court (Original Side) Rules, 2018 and will come into force on March 1, 2018, to streamline the pending litigation. The New rules will surely help in shortening the time of ordinary original civil jurisdiction, clearing out frivolous cases, and also it will keep a check on unjustified adjournments by imposing a cost.

 

The above cases, having reached the Hon’ble Supreme Court, highlight the evolving IP jurisprudence in a fast emerging India as the hub for innovation and investment, and set the ball rolling for the times ahead for the correct application of law and speedy disposal of cases in line with the merits and procedural nitty-gritties.