The Bad Faith Adoption of Trademark and Defense of Delay and Acquiescence
Introduction:
In trademark law, the adoption of a well-known trademark in bad faith by another entity and the defenses of delay and acquiescence often surface as contentious issues. A recent case highlighting these issues is the lawsuit filed by Infosys, a global leader in information technology and consulting services, against Southern Infosys Limited. This case provides a crucial insight into how courts assess trademark infringement, the significance of trademark recognition, and the defenses raised by the alleged infringer.
Case Background:
Infosys, established in 1981, is a powerhouse in the IT industry, boasting a market capitalization of approximately $93.6 billion USD. The company's extensive recognition and distinctiveness are underscored by its well-maintained online presence and its official website, www.infosys.com, which has been operational since 1992. The trademark 'INFOSYS' has been declared a 'well-known' mark by both the courts and the trademark registry, affording it extensive protection under the law.
The lawsuit, filed under Section 29(5) of the Trademarks Act, 1999, by Infosys, aimed to prohibit Southern Infosys Limited from using the 'INFOSYS' trademark as part of its corporate name. Section 29(5) explicitly prohibits the use of a registered trademark as part of a corporate name in a manner that could imply a business connection or endorsement by the trademark owner, potentially leading to public confusion.
Arguments and Allegations:
Infosys argued that the defendant's use of 'INFOSYS' in their corporate name constituted infringement, given the substantial reputation and recognition of the 'INFOSYS' trademark. On the other hand, Southern Infosys Limited contended that there was a significant delay and acquiescence on the part of Infosys. They highlighted that their company, initially listed as Disha Financial Services Ltd. in 1997, changed its name to Southern Infosys Limited in 1998. This change went uncontested for nearly two decades, with the company being listed on the Bombay Stock Exchange (BSE) in 2016. Southern Infosys argued that Infosys, given its active presence on the BSE, must have been aware of their existence and business operations long before filing the lawsuit in 2023.
Bad Faith Adoption:
The court, in its analysis, acknowledged that Southern Infosys Limited adopted the term 'Southern Infosys Limited' in 1998, 17 years after Infosys had established and registered its trademark. Despite the 'INFOSYS' trademark not being classified as 'well-known' at that point, the court highlighted the expectation of due diligence on the part of the defendant. Given that both companies operate in the same industry, the defendant had constructive notice of the plaintiff's registered trademark. The failure to perform due diligence indicated a lack of good faith, suggesting an attempt to capitalize on Infosys's established goodwill and reputation.
Defense of delay and acquiescence:
The court further addressed the defense of delay and acquiescence. It noted that mere delay in asserting trademark rights does not amount to acquiescence. Legal precedents stipulate that for acquiescence to be a valid defense, there must be unequivocal evidence of positive acts of encouragement by the trademark owner, not just silence or inaction. In this case, there was no evidence to suggest that Infosys had explicitly consented to or encouraged the defendant's use of the 'INFOSYS' trademark.
Conclusion:
The court's decision to restrain Southern Infosys Limited from using the 'INFOSYS' trademark underscores the stringent protection afforded to well-known trademarks and the critical importance of good faith in adopting corporate names. This case highlights that the defense of delay and acquiescence requires clear evidence of the trademark owner's positive encouragement or explicit consent, and mere inaction is insufficient. The ruling serves as a cautionary tale for companies about the necessity of thorough due diligence and the risks associated with attempting to leverage the established reputation of well-known trademarks.
Case Title: Infosys Limited Vs Southern Infosys Limited
Judgment/Order Date: 27.05.2024
Case No. CS Comm 257 of 2024
Neutral Citation: 2024:DHC:4724
Name of Court: Delhi High Court
Name of Hon'ble Judge:Sanjeev Narula, H.J.
Disclaimer:
Ideas, thoughts, views, information, discussions and interpretation expressed herein are being shared in the public Interest. Readers' discretion is advised as these are subject to my subjectivity and may contain human errors in perception, interpretation and presentation of the fact and issue involved herein.
Written By: Advocate Ajay Amitabh Suman
IP Adjutor [Patent and Trademark Attorney]
United & United
Email: amitabh@unitedandunited.com
Ph No: 9990389539
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