Mere Filing of Trademark Application Cannot Create Cause of Action for Passing Off: Supreme Court Settles the Law
Introduction
In the realm of intellectual property law, one of the frequently misunderstood aspects concerns the moment at which a legal right actually crystallises and becomes enforceable before a court of law. Can a person run to court simply because someone else has applied to register a trademark that is similar to theirs? Does the mere act of filing an application before the Trade Mark Registry give rise to a cause of action, particularly in a passing off suit? These were the precise and important questions that came up for consideration before the Supreme Court of India in the case of K. Narayanan and Anr. versus S. Murali, decided on 5th August 2008. The Supreme Court, through this judgment, laid down a clear and unambiguous principle that the mere filing of an application for registration of a trade mark does not constitute any part of the cause of action in a suit for passing off. This seemingly simple proposition has far reaching consequences for traders, businesses, and legal practitioners dealing with trademark disputes across the country.
Factual and Procedural Background
The story begins in the world of a rather humble but popular snack — banana chips. The appellants, K. Narayanan and another person, were engaged in the business of manufacturing and selling banana chips in Coimbatore, Tamil Nadu. They claimed to have adopted the trade mark "A-ONE" for their banana chips as far back as 1986, which gave them a reasonably long period of prior use over the mark. On 6th December 1999, the appellants took a formal step and filed an application for registration of the trade mark "A-ONE" before the Trade Mark Registry at Chennai. It is important to note that at the time of the litigation, this application was still pending and had not been decided upon.
The respondent, S. Murali, was also in a similar line of business. On 7th February 2000, the respondent filed a civil suit being O.S. No. 1 of 2000 before the District Judge at Coimbatore against the appellants, seeking an injunction to stop the appellants from using the trade mark "A-ONE." The District Judge at Coimbatore dismissed this suit on 23rd December 2001, deciding in favour of the appellants at that stage.
Things took an interesting twist when on 24th January 2000, the respondent himself filed three trade mark applications bearing numbers 899359, 899360 and 899361 before the Trade Mark Registry at Chennai, claiming to be a user of the mark "A-ONE" throughout India since 1st April 1995. This filing by the respondent in Chennai became the foundation of the appellants' strategy to invoke the jurisdiction of the Madras High Court.
Taking note of these filings by the respondent at the Chennai Registry, the appellants filed C.S. No. 482 of 2001 on 22nd May 2001 before the High Court of Madras. They sought an injunction restraining the respondent from passing off his goods using the trade mark "A-ONE." They also applied for leave to institute the suit before the High Court, which was granted on 11th June 2001. However, on 6th March 2002, the learned Single Judge of the Madras High Court dismissed the injunction application and also revoked the leave that had been granted to the appellants to file the suit. The Single Judge's reasoning was that the mere filing of a trademark application by the respondent in Chennai could not give rise to a cause of action for passing off, so as to clothe the Madras High Court with territorial jurisdiction. The Division Bench of the Madras High Court, by its order dated 18th April 2002, upheld the Single Judge's order and dismissed the appeals filed by the appellants. The appellants then approached the Supreme Court of India by way of Special Leave Petitions, which were converted into Civil Appeal Nos. 4480-4481 of 2002 and ultimately heard and decided by a Bench of Justices Tarun Chatterjee and H.S. Bedi.
The Dispute
The core of the dispute revolved around a single pointed legal question — whether the filing of an application for registration of a trade mark by the respondent before the Trade Mark Registry in Chennai could be treated as a part of the cause of action for a passing off suit, so as to give territorial jurisdiction to the Madras High Court, even though both parties lived and carried on their business exclusively in Coimbatore.
The appellants argued that when the respondent filed his trade mark applications in Chennai claiming use of the mark "A-ONE" throughout India since 1995, including in Chennai, this act amounted to a "threat" to the appellants' rights in Chennai. They relied upon a judgment of the Division Bench of the Delhi High Court in Jawahar Engineering Company and Ors. Ghaziabad versus Jawahar Engineers Pvt. Ltd., Sri Rampur, Distt. Ahmednagar, Maharashtra, reported in 1983 PTC 207, which had held that when an injunction is sought, it is not necessary that the threat should have become a reality. A threat that is still to materialise can also be the basis for seeking an injunction. The appellants further argued that since the respondent had claimed use of the mark "throughout India" in his application, this necessarily included Chennai, thereby giving the Madras High Court jurisdiction to entertain the suit.
The respondent, on the other hand, took a firm stand that both parties resided and did business only in Coimbatore, the goods were sold only in Coimbatore, and therefore the Madras High Court had no territorial jurisdiction. The respondent argued that mere filing of a trade mark application at the Chennai Registry was not the same as actually using the mark in commerce, and that passing off, as a legal action, requires actual commercial activity involving deception — specifically, the selling of goods deceptively as though they were the goods of another. Without any such actual commercial activity in Chennai, no cause of action could be said to have arisen there.
Reasoning and Analysis of the Court — Including Judgments and Their Context
The Supreme Court examined the relevant provisions of the Trade and Merchandise Marks Act, 1958 before arriving at its conclusion. Section 18(1) of the Act allows any person who claims to be the proprietor of a trade mark, whether it is already being used or is proposed to be used, to apply for registration before the Registrar. This provision, the Court noted, means that even a mark that has not yet been used in trade can be the subject of a registration application. Section 28 of the Act, on the other hand, provides that once a trade mark is actually registered, the registered proprietor gets the exclusive right to use that mark and the right to obtain relief for infringement. The Court drew a very clear and logical conclusion from these two provisions read together — a right to enforce a mark arises only upon registration, not upon the mere filing of an application.
The Court reproduced and strongly relied upon the reasoning of the Division Bench of the Madras High Court, which had earlier decided the very same issue in Premier Distilleries Pvt. Ltd. versus Sushi Distilleries, reported in 2001(3) CTC 652. The Division Bench in that case had explained that the term "cause of action" itself makes clear that the action must follow the cause, and cannot precede it. Before registration is granted, there is no right in a person to assert that the mark has been infringed. A proposed registration which may or may not ultimately be granted cannot give rise to a cause of action, whether the application has been filed by the plaintiff or by the defendant. This reasoning was found to be sound and was affirmed by the Supreme Court.
The Supreme Court also referred to and relied upon the decision in Wander Ltd. and Anr. versus Antox India P. Ltd., reported as MANU/SC/0595/1990. This judgment had discussed the essential nature of a passing off action. The Court explained that passing off is a species of unfair trade competition, where one person, through deception, attempts to gain the economic benefit of the reputation that another has built in trade or business. It is regarded as an action for deceit. The essential ingredients are a misrepresentation made by a trader to his prospective customers, which is calculated to injure the business or goodwill of another, and which actually or probably causes such damage. The Court then applied this understanding to the facts before it and found that the mere filing of a trade mark application could not constitute any such misrepresentation or deception. By filing an application, the respondent had not sold any goods in Chennai, had not passed off his goods as those of the appellants, and had not made any representation in the course of trade at all. The essential requirements of a passing off action were therefore entirely absent.
The most significant and directly applicable precedent relied upon by the Supreme Court was the decision in Dhodha House versus S.K. Maingi, reported as MANU/SC/2524/2005 and also cited as 2006(32)PTC1(SC). In this case, the Supreme Court had itself laid down the proposition that a cause of action will arise only when a registered trade mark is used, and not when an application is merely filed for registration. The Court in Dhodha House had further elaborated that a person in whose favour a registration certificate has already been granted can always oppose a conflicting application before the Registrar, who has jurisdiction to decide such questions. Importantly, the Court had also held that a cause of action for filing a suit would not arise within the jurisdiction of a particular court merely because an advertisement has been published in the Trade Marks Journal or any other journal, notifying the fact that such an application has been filed. In Dhodha House, the Supreme Court had also expressly concurred with the view taken by the Madras High Court Division Bench in the Premier Distilleries case. This position, therefore, was not a new one, and had been consistently followed.
The appellants' reliance on the Jawahar Engineering Company case from the Delhi High Court was addressed and distinguished. The Court noted that in the Jawahar Engineering case, the plaintiff was a registered owner of the trade mark and the action concerned a threatened breach of a registered trademark. That situation is fundamentally different from the present case, where the appellants themselves were not registered owners of the mark — their own application for registration was pending. The protection available to a registered trademark owner is governed by separate legal principles, and those principles cannot be automatically extended to a person who merely has a pending application.
The Court was thus clearly of the view that the filing of a trademark application is an act done before the Trade Mark Registry, and it does not have any bearing on the question of territorial jurisdiction of civil courts for a passing off suit. Passing off is a common law action that has nothing to do with the location of the Trade Mark Registry or the fact that some person has or has not filed a registration application. What matters for a passing off suit is where the actual commercial activity — the actual sale and deceptive misrepresentation — took place. Since all the commercial activity of both parties was confined to Coimbatore, only a court in Coimbatore could have entertained the suit.
Final Decision of the Court
The Supreme Court dismissed the appeals filed by the appellants with no order as to costs. The Court upheld the order of the Division Bench of the High Court of Madras dated 18th April 2002, which had in turn upheld the order of the learned Single Judge of the Madras High Court dated 6th March 2002. The Court confirmed that the appellants could not maintain a suit in the High Court of Madras seeking an injunction to restrain the respondent from passing off his goods using the trade mark "A-ONE," when the only basis for invoking the jurisdiction of the Madras High Court was the trade mark application filed by the respondent before the Trade Mark Registry in Chennai. Since the essential ingredients of passing off were absent and the entire commercial activity was confined to Coimbatore, there was no cause of action that arose within the territorial jurisdiction of the Madras High Court.
Point of Law Settled in the Case
The Supreme Court settled a very important and practical point of law through this judgment. It held, clearly and unambiguously, that the mere filing of an application for registration of a trade mark does not constitute any part of the cause of action in a suit for passing off. A cause of action in a passing off suit arises from actual commercial activity involving deception — the selling of goods by one person in a manner designed to mislead the public into believing that the goods are those of another. It has nothing to do with proceedings before the Trade Mark Registry. A trade mark application filed in one city cannot be used as a device to manufacture jurisdiction in the courts of that city for a passing off suit, when the actual commercial dispute is centered elsewhere. The Court also reinforced the broader principle that before a trade mark is actually registered, no right of enforcement against infringement arises, and a pending application cannot be treated as equivalent to a registered mark for the purpose of asserting legal rights in court.
Case Details
Title: K. Narayanan and Anr. Vs S. Murali
Date of Order: 5th August 2008
Case Number: Civil Appeal Nos. 4480-4481 of 2002
Neutral Citation: MANU/SC/3252/2008
Equivalent Citations: AIR 2008 SC 3216; (2008) 10 SCC 479; 2008 (38) PTC 22 (SC); JT 2008 (9) SC 26; 2008 (11) SCALE 175; MIPR 2008 (3) 1
Name of Court: Supreme Court of India
Name of Hon'ble Judges: Justice Tarun Chatterjee and Justice H.S. Bedi
Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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Headnote
K. Narayanan and Anr. versus S. Murali — Supreme Court of India — Civil Appeal Nos. 4480-4481 of 2002 — Decided on 5th August 2008
Held: The mere filing of an application for registration of a trade mark before the Trade Mark Registry does not constitute any part of the cause of action in a suit for passing off. A passing off action is a common law remedy founded on actual commercial deception — the misrepresentation of one's goods as those of another in the course of trade — and has no connection with the location of the Trade Mark Registry or the fact of filing a registration application. Before registration is actually granted, no right arises in the applicant to assert infringement of the mark, and a pending application — which may or may not ultimately be allowed — cannot confer any cause of action upon the plaintiff, regardless of whether it is the plaintiff or the defendant who has filed the application. Territorial jurisdiction of a court in a passing off suit is determined by where the actual commercial activity and deception occurred, not by where the Trade Mark Registry is located. Appellants, both residing and carrying on business exclusively in Coimbatore, could not invoke the jurisdiction of the High Court of Madras merely on the basis of trade mark applications filed by the respondent before the Trade Mark Registry at Chennai. Appeals dismissed.
Acts referred: Trade and Merchandise Marks Act, 1958 — Sections 18(1) and 28.
Cases referred: Wander Ltd. and Anr. v. Antox India P. Ltd., MANU/SC/0595/1990; Dhodha House v. S.K. Maingi, MANU/SC/2524/2005, 2006(32)PTC1(SC); Premier Distilleries Pvt. Ltd. v. Sushi Distilleries, 2001(3) CTC 652; Jawahar Engineering Company and Ors. Ghaziabad v. Jawahar Engineers Pvt. Ltd., 1983 PTC 207 — Distinguished.
