Introduction:
The field of
Intellectual Property Rights (IPR) has long been marked by intricate legal
debates and evolving judicial interpretations. In India, the Trademarks Act,
1999, serves as a cornerstone of trademark law, delineating the rights,
obligations, and remedies available to trademark holders. Among its numerous
provisions, Section 124 has emerged as a focal point of contention,
particularly concerning the stay of civil suits involving trademark
infringement and passing off when a rectification petition is filed. The
implications of this section have become even more complex following
significant legislative changes, notably the abolition of the Intellectual
Property Appellate Board (IPAB) and the establishment of the Intellectual
Property Division in the High Court of Delhi.
This article delves
into the divergent judicial opinions on the application of Section 124,
examines the impact of recent legislative changes, and explores potential
avenues for resolving the prevailing legal uncertainties. It also offers a
critical analysis of the underlying principles governing this provision and
suggests future directions for achieving greater consistency in judicial
interpretation.
Section 124 of
the Trademarks Act, 1999: An Overview:
Section 124 of the
Trademarks Act, 1999, plays a crucial role in the procedural framework of
trademark litigation in India. It provides for the stay of civil suit
proceedings when a prima facie case of invalidity of a trademark is presented
and a rectification petition is filed before the appropriate forum. The
legislative intent behind this provision is to prevent conflicting decisions on
the validity of a trademark by ensuring that the issue is adjudicated by the
designated authority, such as the High Court or formerly the IPAB, before the
civil suit proceeds. For ease in reference , relevant Part of Section 124 of
Trademarks Act 1999 is reproduced as under:
“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 defence under clause (e) of sub-section (2) of section
30 and the plaintiff pleads the invalidity of registration of the defendants
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
1[High Court], 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 1[High Court]
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.”
The core issue that has
arisen in judicial interpretation is whether this provision requires the stay
of suits involving both trademark infringement and passing off claims, or if it
applies solely to infringement claims. The distinction between these two types
of claims is crucial, as infringement pertains to the violation of statutory
rights under the Trademarks Act, whereas passing off is a common law tort aimed
at protecting the goodwill associated with unregistered trademarks.
Bone of
Contention: The Scope of Section 124:
The primary legal question
revolves around whether Section 124 mandates the stay of both infringement and
passing off claims when a rectification petition is filed. This issue has been
further complicated by the transfer of rectification jurisdiction from the IPAB
to the High Courts, following the abolition of the IPAB in 2021. Judicial
interpretations have varied, leading to significant debate and differing
rulings across various High Courts. The crux of the debate lies in whether the
procedural coherence intended by Section 124 extends to both statutory and
common law claims or if its scope is limited to statutory infringement claims
alone.
Several relevant cases
have highlighted this divergence in judicial opinion, creating a complex legal
landscape for practitioners and litigants alike. These cases include Sana
Herbals Pvt. Ltd. Vs. Mohsin Dehlvi [2022:DHC:005678], Mr. Amrish Aggarwal
Trading as Mahalaxmi Product Vs. Venus Home Appliances Pvt. Ltd.
[2023:DHC:7127], Micro Labs Limited vs. Eris Life Sciences [24.07.2018:
O.S.A.Nos.167 to 169 of 2018]:Division Bench-Madras High Court and others, which have contributed to the
ongoing debate.
Case Analysis of
Relevant Case Laws:
Sana Herbals
Pvt. Ltd. Vs. Mohsin Dehlvi [2022:DHC:005678]:
In the Sana Herbals
case, the Delhi High Court's Single Judge addressed the implications of the
abolition of the IPAB and the subsequent transfer of jurisdiction to the High
Court. The court held that this legislative change removed the necessity to
stay both infringement and passing off suits when a rectification petition is
pending. The rationale was that since the High Court now handles both the
rectification petitions and the civil suits, there is no longer a risk of
conflicting decisions. Consequently, the court concluded that staying the suits
was not warranted under these new circumstances. The Relevant finding of
Hon’ble Single Judge, High Court of Delhi , in this matter is reproduced herein
below for ease in reference:
“7…there have been
subsequent developments since the passing of judgment in Patel Field Marshal
Agencies (supra). In terms of the Tribunals Reforms Act, 2021, the IPAB has
been abolished and the jurisdiction to decide rectification petitions now vests
with the High Court under Section 21 of the Act. Therefore, now the suit as
well as the rectification applications have to be decided by one authority
alone i.e. the High Court and resultantly, there cannot be any possibility of
conflicting decisions. Hence, the rectification petitions can be clubbed with
the civil suits and there is no requirement of staying the civil suit.”
This decision marked a
significant departure from earlier interpretations, raising questions about the
continued relevance of Section 124's stay provision in the post-IPAB era.
Mr. Amrish
Aggarwal Trading as Mahalaxmi Product Vs. Venus Home Appliances Pvt. Ltd.
[2023:DHC:7127]-Single Judge, Delhi High Court.
In contrast, another
Single Judge of the Delhi High Court in Mr. Amrish Aggarwal disagreed with the
ruling in Sana Herbals. The judge
referred the issue to the Division Bench, questioning whether the earlier
judgment had properly applied Section 124(2) of the Trademarks Act. The
relevant observation of the Hon’ble Single Judge is as under:
“Whether the view by the
Coordinate Single Bench in para 7 of Sana Herbals7 , that, after the abolition
of the IPAB, there is no requirement of staying a civil suit during pendency of
the rectification petition, even where the rectification petition is instituted
under Section 124 of the Trade Marks Act, can sustain, in view of Section
124(2)?.
The central issue was
whether the stay should extend to both infringement and passing off actions, or
if the stay was limited to infringement claims alone. This referral highlighted
the unresolved tension between different judicial interpretations and
underscored the need for further clarification from a higher judicial
authority.
The Division
Bench Ruling: Amrish Aggarwal Trading as Mahalaxmi Product Vs. Venus Home
Appliances Pvt. Ltd. [2024:DHC:3991-DB]-Division Bench, High Court of Delhi.
The Division Bench in
Amrish Aggarwal provided a more definitive interpretation by affirming the
necessity to stay both infringement and passing off claims when a rectification
petition is pending. The Relevant Paras of this Judgement is reproduced herein
below:
“2. The issue arises in the
context of Section 124 of the Trade Marks Act, 19992 and which envisages
proceedings in a suit for infringement or passing off being stayed if it be
found that proceedings for rectification have been initiated or were pending on
the date when the suit comes to be instituted.
The Hon’ble Division
Bench, also negated the argument of the Petitioner that under Section 124 of
Trademarks Act 1999 , passing off action is liable to be continued. The
relevant portion of the finding of Hon’ble Division Bench is as follows:
“34…..
Mr. Suman further submitted that without prejudice to his preceding argument,
even if the Court were to arrive at a finding that suit proceedings are liable
to be stayed as per Section 124 of the 1999 Act, the same would not extend to a
passing off action since that is outside the purview of Section 124 of the 1999
Act.”.[@ Para 34 and @Pg.131-132 of Plaintiff’s list of Judgment dated
04.07.2024].
This argument of the Petitioner
was negated by Hon’ble Division Bench as follows:
“53.
Similarly, the argument of learned counsel based on the distinction between an infringement action
and passing off is unmerited since it
proceeds in ignorance of the fact that in case of the latter, registration is not even recognised to be a
valid defence.”
Thus in this matter,
the Bench emphasized that Section 124's intent is to centralize the resolution
of trademark validity issues and prevent parallel adjudications that could lead
to inconsistent decisions. This ruling reinforced the view that the stay should
be comprehensive, covering both types of claims to maintain procedural
coherence and ensure that the validity of the trademark is resolved before any
further legal action.
Micro Labs
Limited vs. Eris Life Sciences [24.07.2018: O.S.A.Nos.167 to 169 of 2018]:Division
Bench-Madras High Court.
The Division Bench of
the Madras High Court in Micro Labs also supported the view that both
infringement and passing off claims should be stayed. The relevant Portion of
this Judgement is reproduced as under:
“2……an
application was filed seeking stay of the proceedings of the suit till the
rectification proceedings are over. The learned single Judge dismissed the
injunction applications filed by the appellant while granting stay of the
proceedings of the suit as prayed for. Challenging the same, the present
appeals are filed.
4.Learned
counsel appearing for the appellant would submit that it is a suit not only for
infringement of trade mark but also for passing off. The respondent is a prior
user. It is only during the proceedings before the Court, an application for
rectification was filed. Thus the orders passed by the learned single Judge
would require interference.
8…..we are inclined to grant stay of
the proceedings of the suit…..”
This decision aligned
with the recent Delhi High Court Division Bench ruling but stood in contrast to
earlier decisions that allowed the continuation of passing off actions while
staying infringement claims. The Micro Labs ruling further contributed to the
jurisprudential divide on the application of Section 124.
Puma Stationer
P. Ltd. Vs. Hindustan Pencils Ltd. [2010 (43) PTC 479 (Del) DB]:Division
Bench-High Court of Delhi.
In the Puma Stationer
case, the Delhi High Court Division Bench had previously allowed passing off
actions to continue while staying infringement claims. The relevant portion of
the Judgement is as under:
15. We are of the view, therefore, that the
law on this issue is quite well settled. Where an application for
rectification/cancellation of a registered trade mark is pending before the
statutory authority, the High Court is obliged to stay further proceedings in
the suit pending before it pursuant to Section 124(1) of the Trade Marks Act, 1999.
16. In so far as the suit out of which
present appeal arises is concerned, there is an allegation against the
Appellants of passing off the trade mark `Plasto‟ as well as `Non-Dust‟ and
there is an allegation of infringement of the trade mark `Non-Dust‟.
17. In view of the express provisions
of Section 124 of
Trade Marks Act, we stay further proceedings in the suit in so far as the
alleged infringement is concerned with regard to the trade mark `Non-Dust‟
until the disposal of the matter before the Intellectual Property Appellate
Board. It is, however, made clear that the passing off action may continue.
This earlier decision
highlighted the inconsistency in the application of Section 124 and underscored
the lack of a uniform approach to handling combined claims. The contrasting
rulings in Puma Stationer and subsequent cases have created a patchwork of
legal interpretations that complicate the predictability and consistency of
trademark litigation in India.
The Impact of
Legislative Changes:
The abolition of the
IPAB and the establishment of the Intellectual Property Division in the Delhi
High Court have introduced new dynamics into the application of Section 124.
These changes have raised questions about the continued relevance of the stay
provision, particularly in light of the High Court's expanded role in handling
both rectification petitions and civil suits. While some judicial decisions,
like Sana Herbals, have interpreted these changes as justifying a lift on the
stay, others, including the Amrish Aggarwal ruling, have maintained that the
fundamental principles of Section 124 remain unchanged.
The legislative
transition has added complexity to the interpretation of whether the stay
should extend to both infringement and passing off claims. It has also
highlighted the need for a more nuanced understanding of how the procedural
aspects of trademark law interact with broader changes in the legal and
institutional landscape.
Divergent Judicial
Opinions: The Saga Continues:
The ongoing divergence
in judicial opinions, as seen in cases such as Micro Labs , Puma
Stationer and Amrish Aggarwal, reflects the broader confusion
surrounding Section 124. The inconsistency between different Division Benches
in the Delhi High Court and between Delhi and Madras High Courts highlights the
need for a clear and unified approach to the application of the stay
provisions. This lack of uniformity undermines the predictability and stability
of trademark litigation, leading to increased uncertainty for litigants and
legal practitioners.
Appropriate
Legal Recourse: The Need for a Larger Bench Reference:
Given the conflicting
rulings and the significant impact on trademark dispute resolution, it is
imperative to refer the issue to a larger bench of the Delhi High Court. A
larger bench can provide definitive guidance on the application of Section 124,
ensuring a consistent and coherent approach across different cases. This
approach is consistent with established principles from cases like Lala
Shri Bhagwan Das Vs. Shri Ram Chand [1965 SCC OnLine SC 73] and Mahadeolal
Kanodia Vs. Administrator General of West Bengal [1960 SCC OnLine SC 47],
which underscore the importance of larger bench decisions in resolving complex
legal issues.
A larger bench decision
would not only clarify the scope of Section 124 but also help harmonize the
procedural framework for trademark litigation in India. This would, in turn,
enhance judicial efficiency, reduce the likelihood of conflicting decisions,
and provide greater legal certainty for parties involved in trademark disputes.
Future
Directions and Conclusion:
Trademark infringement
and passing off claims remains a contentious issue. The divergence in judicial
opinions has exacerbated the confusion surrounding the application of this
provision. The need for a larger bench reference is evident, as it would
provide the necessary authoritative guidance to resolve these inconsistencies. Looking
ahead, there is a strong case for judicial clarification that explicitly
defines the scope of Section 124 in light of the evolving legal landscape.
Until such clarity is achieved, the legal community and litigants will continue
to face challenges in navigating the procedural aspects of trademark disputes,
potentially undermining judicial efficiency and legal certainty.
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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