Resilient Innovations Pvt. Ltd. Vs. PhonePe Private Limited

Resilient Innovations Pvt. Ltd. Vs. PhonePe Private Limited: Issue of invalidity can be framed post filing of Rectification Petition

Case Title: Resilient Innovations Pvt. Ltd. Vs. PhonePe Private Limited & Anr.

Date of Order: 18 May 2023

Case No.: Not available in provided excerpts

Neutral Citation: 2023:DHC:3426-DB

Name of Court: Delhi High Court

Name of Judge: Hon’ble Justice Rajiv Shakdher and Hon’ble Justice Talwant Singh

Introduction:

The present case involves a legal dispute between Resilient Innovations Pvt. Ltd. (RIPL) and PhonePe Private Limited (PPL) regarding trademark rectification applications under the Trademarks Act, 1999. The matter concerns RIPL's challenge to the validity of PPL’s registered trademarks and PPL’s allegations of infringement against RIPL’s use of "PostPe," which PPL contended was deceptively similar to its trademark "PhonePe." The dispute traverses issues of maintainability, prior use, and the statutory framework governing trademark rectification.

Factual Background:

PPL, the registered proprietor of the trademark "PhonePe," alleged that RIPL’s use of "PostPe" was an infringement of its intellectual property rights. Initially, PPL filed a suit in the Bombay High Court against RIPL, seeking an injunction against the use of "PostPe." While this suit was later withdrawn, PPL retained the liberty to file a fresh suit. Meanwhile, RIPL initiated rectification proceedings against PPL’s registered trademarks under Section 57 of the Trademarks Act, challenging their validity. The present case stems from the dismissal of these rectification applications by the learned Single Judge of the Delhi High Court.

Procedural Background:

The learned Single Judge dismissed RIPL’s rectification applications on the first date of hearing, holding that they were not maintainable. The court ruled that RIPL had failed to demonstrate the grounds necessary to challenge PPL’s trademark registrations. Aggrieved by this order, RIPL filed an appeal before the Division Bench of the Delhi High Court, arguing that the dismissal was premature and that the rectification proceedings were validly initiated.

Issues Involved in the Case

The case raised multiple legal issues, including whether the rectification applications filed by RIPL under Section 57 of the Trademarks Act were maintainable. The Court also examined whether the withdrawal of PPL’s previous suit and the subsequent refiling of a fresh suit impacted the rectification proceedings. Another key question was whether the Single Judge was correct in dismissing the rectification applications at the notice stage without a detailed examination. The Court also analyzed whether the appeals preferred by RIPL were maintainable under the relevant statutory framework.

Submissions of the Parties:

RIPL argued that the learned Single Judge erred in summarily dismissing its rectification applications without considering the statutory requirements under Section 57. It contended that it was an "aggrieved party" as per the Trademarks Act, given that PPL’s trademarks allegedly restricted its legitimate use of "PostPe." RIPL further asserted that the pending suit in Delhi had no bearing on the rectification proceedings, as the two matters were legally distinct.

PPL countered that RIPL’s rectification applications were not maintainable due to procedural lapses. It argued that RIPL was attempting to circumvent its liability in the pending infringement suit by challenging the validity of PPL’s trademarks. PPL also relied on judicial precedents to assert that rectification proceedings cannot be used as a defense strategy in an ongoing infringement dispute.

Judgments Cited by the Parties:

Both parties relied on significant judgments to support their arguments. RIPL cited Patel Field Marshal Agencies v. P.M. Diesels Ltd., (2018) 2 SCC 112, arguing that the rectification proceedings had an independent statutory basis and should not have been dismissed summarily. PPL relied on Himalaya Drug Company v. S.B.L. Ltd., MANU/DE/5479/2012, contending that the Trademarks Act was a complete code and that the rectification applications were procedurally flawed.

The Court also examined Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2011) 8 SCC 333, which emphasized that appellate jurisdiction should be construed strictly in matters of procedural compliance. This case was relevant in determining whether RIPL had followed the correct procedural framework in filing its rectification applications.

Whether the LPA Preferred by RIPL Are Maintainable?

The Delhi High Court ruled that the appeals preferred by RIPL were maintainable. PPL had raised a preliminary objection arguing that no intra-court appeal was available against a decision on a rectification application under Section 57 of the Trademarks Act, 1999. PPL contended that the statute did not expressly provide for an appeal, and by implication, the legislature intended to exclude it.

The Court disagreed with PPL’s argument and held that there was nothing in the framework of the 1999 Trademarks Act that expressly or impliedly excluded an intra-court appeal. The Court noted that the absence of an explicit provision barring such appeals indicated that Clause 10 of the Letters Patent, which permits intra-court appeals, remained applicable.

The Court examined the National Sewing Thread Co. Ltd. v. James Chadwick & Bros. Ltd. (1953 AIR 357) case, where the Supreme Court ruled that intra-court appeals under the Letters Patent were maintainable unless explicitly excluded by a statute. It also referred to P.S. Sathappan (Dead) by LRS v. Andhra Bank Ltd. (2004) 11 SCC 672, which held that unless an appeal is expressly or necessarily barred, the right to appeal under Letters Patent prevails.

The Court distinguished this case from Himalaya Drug Company v. S.B.L. Ltd., MANU/DE/5479/2012, which held that the Trademarks Act is a complete code. It clarified that while the Trademarks Act provides a comprehensive mechanism for rights and remedies, it does not explicitly exclude the applicability of intra-court appeals.

The Court concluded that appeals are a creature of statute, and unless expressly excluded, they are maintainable. The Letters Patent is a special law that allows intra-court appeals unless expressly barred. Since there was no explicit or implied exclusion of intra-court appeals in the Trademarks Act, 1999, the appeals preferred by RIPL were held to be maintainable.

Whether the issue of invalidity can be framed even post-filing of a rectification application under Section 57 of the Trademarks Act, 1999:

The Delhi High Court analyzed whether the issue of invalidity can be framed even post-filing of a rectification application under Section 57 of the Trademarks Act, 1999, in the context of Section 124. The court addressed the relationship between rectification proceedings and infringement suits, particularly regarding the timing of framing an issue of validity.

The court observed that Section 124 does not mandate that an issue of invalidity must always be framed before a rectification application is filed. Instead, the provision only requires that when an infringement suit is pending and a party pleads invalidity, the civil court must first be satisfied that the plea is prima facie tenable before staying the suit and allowing rectification proceedings. The framing of an issue of validity, therefore, serves as a procedural safeguard but does not operate as a strict precondition to initiating rectification proceedings.

The court relied on Patel Field Marshal Agencies v. P.M. Diesels Ltd., (2018) 2 SCC 112, where the Supreme Court held that while Section 124 sets a procedural mechanism, it does not bar a rectification application if the issue of validity has not yet been framed in a pending infringement suit. The High Court emphasized that rectification is an independent statutory remedy and should not be rendered ineffective merely due to procedural technicalities.

Applying this principle, the court reasoned that even if an issue of invalidity has not been framed at the time of filing a rectification application, the rectification petition need not be dismissed outright. Instead, the proper course is for the court dealing with the infringement suit to determine whether an issue of invalidity should be framed and then proceed accordingly. The court concluded that a rectification application should be kept in abeyance rather than dismissed if an issue of invalidity is yet to be frame:

Final Decision:

The Division Bench set aside the learned Single Judge’s order dismissing RIPL’s rectification applications. It remanded the matter for reconsideration, directing the lower court to examine the applications on their merits rather than dismissing them at the outset. The Court emphasized the need for a balanced approach in trademark disputes, ensuring that procedural compliance does not overshadow substantive justice.

Law Settled in the Case:

Maintainability of Appeals: An intra-court appeal under Clause 10 of the Letters Patent is maintainable unless expressly or impliedly barred by statute. Since the Trademarks Act, 1999, does not explicitly exclude such appeals, an appeal against an order rejecting a rectification application is maintainable.

Independent Right to File Rectification Application: A rectification application under Section 57 of the Trademarks Act, 1999, is an independent statutory remedy and can be filed without the necessity of first framing an issue of invalidity in an infringement suit.

Framing of Issue of Invalidity Post-Filing of Rectification Petition: Even if a rectification application is filed before an issue of invalidity is framed in an infringement suit, the rectification petition should not be dismissed outright. Instead, the proper approach is to keep the rectification application in abeyance until the issue of validity is determined in the infringement suit.

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Written By: Advocate Ajay Amitabh Suman,IP Adjutor [Patent and Trademark Attorney] ,High Court of Delhi