Failure to obtain prior permission under Section 124 of Trademarks Act 1999 does not nullify the Trademarks rectification proceedings
Introduction:
Trademark disputes often hinge on complex legal interpretations, particularly regarding the requirement of prior permission under Section 124(1)(b)(ii) of the Trade Marks Act, 1999. The case of Data Infosys Limited vs. Infosys Technologies Limited is a landmark decision by the Delhi High Court, which examined whether a party initiating rectification proceedings before the Intellectual Property Appellate Board (IPAB) required prior permission from the court where an infringement suit was pending? This case set crucial precedents on trademark rectification and the interplay between infringement suits and rectification proceedings.
Factual Background:
Infosys Technologies Limited (hereinafter referred to as "Infosys") filed a trademark infringement suit against Data Infosys Limited (hereinafter referred to as "the defendant"). Infosys alleged that the defendant's use of the mark "Data Infosys" infringed upon its registered trademarks "Infosys" and allied marks.
Infosys held trademark registrations under Classes 16, 9, and 7 under the Trade and Merchandise Marks Act, 1958 (now replaced by the Trade Marks Act, 1999). The plaintiff also objected to the defendant's corporate name and domain name usage, particularly www.datainfosys.net, arguing that such usage amounted to trademark infringement and passing off.
The defendant contested the suit, arguing that Infosys was engaged in software development, whereas Data Infosys was an Internet Service Provider (ISP) operating within India. The defendant asserted that their business fields were distinct and raised various defenses, including delay in initiating legal action.
During the pendency of the suit, the defendant’s trademark "Data Infosys" was registered under Class 38 (telecommunication services), Class 9 (computer hardware), and Class 42 (computer-related services). The defendant sought to amend its pleadings to incorporate its newly obtained trademark registrations, which the court permitted on July 19, 2006.
Subsequently, Infosys initiated rectification proceedings before the IPAB challenging the validity of the defendant’s trademark registrations under Classes 38, 9, and 42. The defendant objected, arguing that Infosys had filed the rectification application without prior permission from the court, which, in its view, was mandatory under Section 124(1)(b)(ii) of the Trade Marks Act, 1999.
The Single Judge dismissed the defendant's objection, ruling that prior court permission was not a prerequisite for initiating rectification proceedings. Aggrieved by this decision, the defendant filed an appeal before the Division Bench of the Delhi High Court, which referred the matter to a Full Bench due to conflicting judicial precedents on the interpretation of Section 124(1)(b)(ii).
Procedural Background:
Infosys filed an infringement suit seeking permanent injunction against Data Infosys. During the pendency of the suit, the defendant obtained trademark registrations for "Data Infosys" under Classes 38, 9, and 42. Infosys filed rectification proceedings before the IPAB challenging the defendant's registrations. The defendant objected, arguing that Infosys failed to obtain prior court permission as required under Section 124(1)(b)(ii). The Single Judge dismissed the defendant’s objection, ruling that prior permission was not mandatory. The defendant appealed to the Division Bench, which referred the issue to a Full Bench due to conflicting judicial views.
Issues Involved in the Case
The primary question before the Full Bench was whether a party must obtain prior permission from the court under Section 124(1)(b)(ii) before filing rectification proceedings before the IPAB. The court also examined whether failure to obtain such permission rendered rectification proceedings null and void. Another key issue was whether the trial court must mandatorily stay the infringement suit if rectification proceedings were pending before the IPAB. The final point of determination was whether the decision of the IPAB on rectification was binding on the civil court adjudicating the infringement suit.
Submissions of the Parties:
The defendant argued that prior permission of the court is a mandatory condition under Section 124(1)(b)(ii) before initiating rectification. It contended that Infosys's rectification proceedings were an abuse of process and should be deemed null and void. The defendant relied on judicial precedents, including Kedar Nath v. Monga Perfumery (AIR 1974 Delhi 12) and AstraZeneca UK Ltd. v. Orchid Chemicals (2006 (32) PTC 733 (Del)), to support the argument that court permission was a statutory requirement.
Infosys argued that Section 124(1)(b)(ii) does not impose a mandatory requirement for prior permission to file rectification proceedings. It contended that IPAB’s jurisdiction is exclusive, and the civil court has no power to decide the validity of a trademark. The plaintiff relied on the Madras High Court’s ruling in B. Mohamed Yousuff v. Prabha Singh Jaswant Singh (2008 (38) PTC 576 (Mad) (DB)), which held that Section 124 only governs stay of suits and does not impose restrictions on filing rectification petitions.
Judgment and Analysis:
The Full Bench of the Delhi High Court, after examining conflicting judicial precedents, ruled in favor of Infosys and held that prior court permission is not a mandatory prerequisite for filing rectification proceedings before the IPAB. The court distinguished between two scenarios under Section 124. If rectification proceedings were pending before filing of the suit, the court must stay the suit until IPAB’s decision. If rectification proceedings were initiated after the suit, the court must assess whether the invalidity claim is prima facie tenable before granting a stay.
The court concluded that Infosys had the statutory right to file rectification proceedings without seeking prior permission. The only consequence of failing to obtain prior permission is that Infosys cannot seek a stay of the infringement suit. The court further clarified that IPAB’s decision on rectification is binding on the civil court. The court also referred to Jeet Biri Manufacturing Co. v. Pravin Kumar Singhal (2011 (47) PTC 231 (IPAB)), where the IPAB ruled that rectification applications remain valid even without prior court permission.
Final Decision:
The Delhi High Court's Full Bench upheld the Single Judge’s ruling and dismissed the defendant's appeal. The judgment clarified that prior court permission is not mandatory for filing rectification proceedings under Section 124(1)(b)(ii). The infringement suit is stayed only if the court finds the invalidity claim prima facie tenable. Failure to seek permission does not invalidate rectification proceedings, but it affects the party's ability to seek a stay of the suit.
Law Settled in this Case:
Parties can file rectification proceedings before the IPAB without prior permission from the civil court. Section 124(1)(b)(ii) governs only the stay of proceedings, not the right to initiate rectification. IPAB’s decision on trademark validity is binding on the civil court. Failure to obtain prior permission does not nullify rectification proceedings but prevents the party from seeking a stay of the suit.
Case Title: Data Infosys Limited & Ors. Vs. Infosys Technologies Limited
Date of Order: 05.02.2016
Case No.: FAO (OS) 403/2012
Court: Delhi High Court
Coram: Hon’ble Justice S. Ravindra Bhat, Justice Vipin Sanghi, Justice Najmi Waziri
Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
