Microsoft Corporation Vs Azure Knowledge Corporation Private Limited

Microsoft Corporation Vs Azure Knowledge Corporation Private Limited: A civil court cannot examine detailed merit of case while deciding the validity of a registered trademark under Section 124 of Trademarks Act 1999

Introduction: The case involves a dispute over the trademark "AZURE" between Microsoft Corporation, the petitioner, and Azure Knowledge Corporation Private Limited, the respondent. Microsoft Corporation filed a commercial civil suit seeking a permanent injunction to restrain the respondent from using the trademark "AZURE", alleging trademark infringement. The respondent contested the validity of Microsoft’s trademark registration and sought rectification of the register under Section 124 of the Trade Marks Act, 1999. The trial court rejected the respondent’s application, leading to the present petition under Article 227 of the Constitution of India before the Gujarat High Court.

Detailed Factual Background:Microsoft Corporation obtained registration of the trademark "AZURE" on 18 June 1998 under Class 9 for computer software. Subsequently, in 2010, Microsoft applied for registration of "AZURE" as a device mark in Classes 16, 37, 38, 41, and 42, which were duly registered.The respondent, Azure Knowledge Corporation Private Limited, applied for registration of "AZURE" on 23 October 2008, which was published for opposition in June 2017. Microsoft filed an opposition against the respondent’s trademark application, and the matter remained pending before the Trademark Registry.Microsoft filed a commercial civil suit on 6 February 2020, alleging that the respondent’s use of "AZURE" constituted infringement and passing off. The respondent filed a written statement on 12 March 2020, denying infringement.The trial court rejected Microsoft’s interim injunction application on 14 March 2020. On 19 November 2022, the respondent filed an amendment application in its written statement to include a challenge to the validity of Microsoft's trademark.The trial court initially rejected the amendment application on 4 May 2023, but the Gujarat High Court set aside that order in Special Civil Application No. 9620 of 2023 on 9 August 2023, allowing the amendment.Following this, the respondent filed an application under Section 124 of the Trade Marks Act, 1999, seeking the framing of an issue on the validity of Microsoft's trademark registration and an adjournment of the suit to enable it to file a rectification petition before the High Court. The trial court rejected the Section 124 application on the grounds that:Microsoft had been using the "AZURE" trademark for 25 years, and the respondent was aware of this usage.The respondent failed to raise the issue of validity when filing its written statement in 2020.The rectification application was not pending before any forum:This led the respondent to challenge the trial court’s order before the Gujarat High Court under Article 227 of the Constitution of India.

Detailed Procedural Background:1. Microsoft filed a commercial civil suit on 6 February 2020, claiming trademark infringement and seeking a permanent injunction against the respondent.2. The respondent filed a written statement on 12 March 2020, without raising the issue of the validity of Microsoft’s trademark registration.3. The trial court rejected Microsoft's interim injunction application on 14 March 2020.4. The respondent filed an amendment application on 19 November 2022 to introduce a challenge to the validity of Microsoft’s registration.5. The trial court rejected the amendment application on 4 May 2023, but the Gujarat High Court allowed it on 9 August 2023.6. The respondent filed an application under Section 124 of the Trade Marks Act, 1999, seeking to frame an issue on the validity of Microsoft's trademark and adjourn the suit for rectification proceedings.7. The trial court rejected the Section 124 application, holding that the respondent’s plea was not prima facie tenable.8. The respondent filed the present Special Civil Application before the Gujarat High Court under Article 227, challenging the rejection of its Section 124 application.

Issues Involved in the Case:1. Whether the trial court erred in rejecting the respondent’s application under Section 124 of the Trade Marks Act, 1999?2. Whether the respondent’s plea challenging the validity of Microsoft’s trademark was prima facie tenable?3. Whether the trial court exceeded its jurisdiction by conducting a detailed examination of the merits of the validity challenge at the Section 124 stage?4. Whether the respondent was estopped from challenging Microsoft’s trademark due to delay?

Respondent (Azure Knowledge Corporation Private Limited) argued that:Microsoft had wrongly obtained registration of "AZURE" for a broad range of goods and services without genuine use.Microsoft’s registration in multiple classes created an unfair monopoly, restricting legitimate businesses from using "AZURE" for unrelated services.The Gujarat High Court, in Special Civil Application No. 9620 of 2023, had already allowed the respondent to amend its written statement, showing that its plea was prima facie tenable.Under Section 124 of the Trade Marks Act, 1999, the trial court was only required to examine whether the validity challenge was arguable, not to decide the merits of the claim.

Petitioner (Microsoft Corporation) argued that:Microsoft had continuously used the "AZURE" trademark since 1998, establishing significant goodwill and reputation.The respondent delayed raising the validity issue until 2022, despite knowing about Microsoft's trademark for over 25 years.The respondent’s application under Section 124 was an attempt to delay the infringement suit and should be dismissed.

Detailed Discussion on Judgments Cited by Parties:The Gujarat High Court relied on the Supreme Court's decision in Patel Field Marshal Agencies Vs. P.M. Diesels Ltd., (2018) 2 SCC 112, which held that:A civil court must only assess whether a validity challenge is prima facie tenable before staying the infringement suit.The trial court has no jurisdiction to decide the validity of a registered trademark; this power is exclusively vested in the High Court or Registrar.The court also referred to Nandhini Deluxe v. Karnataka Cooperative Milk Producers Federation Ltd., (2018) 9 SCC 183, which reiterated that:A proprietor cannot monopolize an entire class of goods if the trademark is not used for all goods in that class.

Detailed Reasoning and Analysis of the Judge:The Gujarat High Court held that:The trial court wrongly examined the merits of the validity challenge, instead of simply determining whether it was prima facie tenable.The respondent had raised an arguable issue, meaning the trial court should have framed an issue and stayed the suit under Section 124.Delay in raising a validity challenge does not bar an otherwise genuine claim.

Final Decision:The Gujarat High Court set aside the trial court’s order and directed it to:1. Frame an issue on the validity of Microsoft's trademark.2. Stay the infringement suit for three months, allowing the respondent to file a rectification petition before the appropriate forum.

Law Settled in This Case:A civil court cannot examine detailed merit of case while deciding the validity of a registered trademark under Section 124 of Trademarks Act 1999.A prima facie tenable challenge under Section 124 must be allowed. Delay alone does not bar a rectification plea.Framing of an issue and staying the suit is mandatory if a validity challenge is arguable.

Case Title: Microsoft Corporation vs Azure Knowledge Corporation Private Limited

Date of Order: 22 July 2024

Case No.: R/Special Civil Application No. 5927 of 2024

Name of Court: High Court of Gujarat at Ahmedabad

Neutral Citation:2024:GUJHC:37685-DB

Name of Judge: Hon’ble Chief Justice Mrs. Justice Sunita Agarwal and Hon’ble Mr. Justice Aniruddha P. Mayee

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