IMS Learning Resources Pvt. Ltd. Vs. Young Achievers

Termination of Trademark Licensing and its Effect

Introduction:The case of IMS Learning Resources Pvt. Ltd. vs. Young Achievers primarily revolves around trademark infringement, passing off, and the unauthorized usage of a registered mark after the termination of a license agreement. The dispute concerns the alleged wrongful use of the trademark "IMS" by the defendant, even after the franchise agreement was terminated. The court examined whether the defendant’s continued use of "IMS" constituted trademark infringement, passing off, and unfair competition.

Factual Background:Plaintiff's Business and Trademark Rights IMS Learning Resources Pvt. Ltd. (Plaintiff) is engaged in the field of coaching and educational services, with a well-established reputation under the trademark "IMS." The plaintiff granted a franchise/license to the defendant, Young Achievers, to use the mark "IMS" from 2007 to 2010 under a license agreement.

Termination of License Agreement:After the expiration of the agreement in 2010, the plaintiff decided not to renew the license. An Exit Paper dated February 1, 2011, was signed by the defendant, acknowledging that they would cease using the "IMS" brand.

Defendant's Continued Use of IMS:Despite the termination, the defendant continued to use "IMS" in the name "IMS Young Achievers."The defendant also published advertisements claiming that "IMS Young Achievers" was a continuation of the plaintiff’s business. The plaintiff filed a suit alleging trademark infringement, passing off, and unfair trade practices.

Plaintiff's Arguments:The plaintiff argued that they held prior and exclusive rights over the "IMS" trademark, and its use by the defendant after the termination of the agreement amounted to infringement.The defendant's use of "IMS Young Achievers" was deceptively similar to the plaintiff's mark and caused confusion in the minds of students and parents.The plaintiff relied on precedents that held that an ex-licensee cannot claim rights over a mark after the license has been revoked. The defendant's actions amounted to passing off, as students and the general public would mistakenly believe the defendant’s institute was associated with IMS.

Defendant's Arguments:The defendant argued that "IMS" is a commonly used acronym and not exclusive to the plaintiff.The composite mark "IMS Young Achievers" was sufficiently distinct and not deceptively similar to "IMS."The defendant claimed that they had an independent reputation in Meerut and that there was no likelihood of confusion. The defendant also contended that the plaintiff failed to establish significant reputation and goodwill in Meerut.

Discussion on Judgments & Citations Referred:

Infringement of Trademark & Passing Off:The court relied on the Supreme Court's decision in Corn Products Refining Co. v. Shangrila Food Products Ltd., (1959 SCC OnLine SC 11), which held that the likelihood of confusion must be judged from the perspective of an ordinary customer of average intelligence.

In Amritdhara Pharmacy v. Satya Deo Gupta, (1962 SCC OnLine SC 13), the Supreme Court held that deceptive similarity must be determined based on the overall impression rather than minor differences.

The court cited Kaviraj Pandit Durga Dutt Sharma v. Navratna Pharmaceutical Laboratories, (1964 SCC OnLine SC 14), to reaffirm that in cases of infringement, the similarity of the dominant feature of the mark is sufficient to establish infringement.

Effect of License Termination:The court relied on Morgardshammar India Ltd. v. Morgardshammar AB, (2012 SCC OnLine Del 4945), which held that once a license is revoked, any continued use of the trademark by the licensee amounts to infringement.

Similarly, in Rob Mathys India Pvt. Ltd. v. Synthes AG Chur (1997 PTC 669), the Delhi High Court ruled that a licensee cannot use the trademark post-termination.

Degree of Malafide Conduct & Damages:The court cited Koninlijke Philips N.V. v. Amazestore (2019 SCC OnLine Del 8198), where it was held that the degree of misconduct affects the quantum of damages awarded.

Court’s Reasoning & Findings:

Trademark Infringement Established:The court held that the defendant’s use of "IMS Young Achievers" amounted to infringement, as the dominant part of the mark remained "IMS," which was identical to the plaintiff’s registered trademark.The court rejected the defendant’s argument that "IMS" was generic, as no substantial evidence was provided to support this claim.

Passing Off Established:The court found that the defendant was riding on the goodwill of the plaintiff and misleading students into believing they were affiliated with IMS.

Effect of License Termination:Since the defendant initially used "IMS" under a valid license agreement, their continued use after termination was deemed dishonest and in bad faith.

Defendant’s Malafide Conduct:The court noted that the defendant attempted to file a trademark application for "IMS" despite knowing the existence of the plaintiff’s registered trademark, further proving bad faith.The defendant also refused to cooperate with court-appointed commissioners during investigations.

Decision of the Court:Permanent Injunction

The court issued a permanent injunction restraining the defendant from using the mark "IMS" or any deceptively similar variation. Award of Damages:The court awarded ₹30 lakhs in damages and costs to the plaintiff for loss of goodwill and legal expenses incurred.Other Reliefs:The court ordered the defendant to cease all use of IMS-branded material and return any proprietary content belonging to the plaintiff.

Conclusion:This case reaffirms the principle that an ex-licensee cannot claim rights over a trademark post-termination and that unauthorized use constitutes infringement and passing off. The judgment strengthens the protection of trademark owners against former franchisees attempting to misuse an established brand’s goodwill.

Case Title: IMS Learning Resources Pvt. Ltd. Vs. Young Achievers

Date of Order: January 20, 2025

Case No.: CS Comm 602 of 2018

Neutral Citation: 2025:DHC:282

Court: Delhi High Court

Judge: Hon’ble Justice Mini Pushkarna.

Advocate Ajay Amitabh Suman

[Patent and Trademark Attorney]

High Court of Delhi

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.

IMS Learning Resources Pvt. Ltd. Vs. Young Achievers

User of Trademark by Ex Franchisee, Post Termination Franchisee Use Agreement

Introduction: The legal battle between IMS Learning Resources Pvt. Ltd. and Young Achievers concerns the alleged infringement and passing-off of the trademark "IMS." The dispute highlights key issues regarding trademark rights, licensing, and the consequences of breaching agreements. This analysis examines the case's facts, legal issues, submissions, and judicial reasoning, providing a comprehensive understanding of the court's decision.

Background:IMS Learning Resources Pvt. Ltd., established in 1977, is a leading provider of coaching for competitive examinations. The plaintiff registered its trademark "IMS" across various classes and established goodwill in educational services. Young Achievers, the defendant, operated as a franchisee of IMS under agreements in 2007 and 2010. Following the termination of the franchise relationship in 2011, disputes arose over the defendant's continued use of the IMS trademark, prompting the plaintiff to file a suit for permanent injunction, infringement, and damages.

Brief Facts of the Case:Plaintiff's Operations: IMS is a prominent brand in coaching for management entrance exams and operates over 100 centers across India.Franchise Agreement: The plaintiff and defendant entered into agreements allowing the defendant to use the IMS trademark for a coaching center in Meerut.Termination: By mutual consent, the agreement was terminated on February 1, 2011, with the defendant signing an Exit Paper agreeing to cease use of the IMS trademark.Dispute: Despite the termination, the defendant continued to use the trademark, rebranded as "IMS Young Achievers," and published advertisements creating confusion among consumers.

Issues Raised:Trademark Ownership: Whether the plaintiff is the proprietor of the "IMS" trademark.Infringement: Whether the defendant's use of "IMS Young Achievers" constitutes infringement, being ex Franchisee. Passing Off: Whether the defendant's actions mislead consumers and harm the plaintiff's goodwill.

Plaintiff's Submission:The defendant admitted to signing the Exit Paper and acknowledged IMS as the plaintiff's trademark. Continued use of the mark "IMS Young Achievers" misleads consumers into believing an association with the plaintiff. The defendant's actions amount to infringement, passing off, and dilution of the plaintiff's goodwill. The defendant acted dishonestly by attempting to free-ride on the plaintiff's reputation.

Defendant's Submission: Claimed that "IMS" is a commonly used term in education and lacks distinctiveness. Asserted that the plaintiff had no prior goodwill in Meerut and the defendant's use of "IMS Young Achievers" was distinct. Argued that its clients are sophisticated and unlikely to be misled. Claimed compliance with the Exit Paper by rebranding and creating a new syllabus.

Judgments Referred and Their Context:Amritdhara Pharmacy vs. Satya Deo Gupta (1962 SCC OnLine SC 13):Established that marks must be compared as a whole to determine the likelihood of confusion.Kaviraj Pandit Durga Dutt Sharma vs. Navratna Pharmaceutical Laboratories (1964 SCC OnLine SC 14):Highlighted the distinction between infringement and passing off actions.Corn Products Refining Co. vs. Shangrila Food Products Ltd. (1959 SCC OnLine SC 11):Emphasized the importance of the first impression in determining trademark similarity.Pankaj Goel vs. Dabur India Ltd. (2008 SCC OnLine Del 1744):Discussed deceptive similarity and its impact on consumer perception.

Reasoning of the Judge:Trademark Ownership: The plaintiff's extensive use and registrations established ownership of the "IMS" trademark.Infringement by ex franchise: The defendant's mark "IMS Young Achievers" was deceptively similar to the plaintiff's trademark, causing confusion. The Defendant, being ex Franchisee, can not use the Trademark, post Termination of Franchisee Agreement.Passing Off: By using "IMS," the defendant misrepresented an association with the plaintiff, harming its goodwill.Dishonest Conduct: The defendant's actions, including misleading advertisements and unauthorized use of the trademark, demonstrated bad faith.

Decision:The court held in favor of the plaintiff, granting a permanent injunction restraining the defendant from using "IMS" or any deceptively similar mark. The defendant was directed to pay damages for infringing the plaintiff's trademark and passing off its services as those of the plaintiff.

Concluding Note:This case underscores the importance of respecting intellectual property rights, particularly in franchise relationships. It highlights the legal consequences of breaching agreements and the necessity for clear branding practices to avoid consumer confusion. The judgment reinforces trademark protection as a means to preserve goodwill and prevent unfair competition.

Case Title: IMS Learning Resources Pvt. Ltd. vs. Young Achievers

Date of Order: January 20, 2025

Case No.: CS(COMM) 602/2018

Neutral Citation: 2025:DHC:282

Court: High Court of Delhi

Judge: Hon’ble Ms. Justice Mini Pushkarna

Advocate Ajay Amitabh Suman

[Patent and Trademark Attorney]

High Court of Delhi

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.