Prior User Triumphs Over Registered Trade Mark: The "Iruttukadai Halwa" Legacy
Introduction
In the world of intellectual property, a fundamental tension often arises between the rights of a person who has been using a trade mark for a long time without formal registration, and someone who later obtains an official registration for the same or a similar mark. Which of the two should the law protect more? This question sits at the heart of trade mark jurisprudence and touches upon the delicate balance between statutory rights created by legislation and common law rights evolved over centuries through judicial precedent.
The Supreme Court of India, in S. Syed Mohideen v. P. Sulochana Bai, reported in (2016) 2 Supreme Court Cases 683, decided on March 17, 2015, confronted precisely this dilemma. The case involved a century-old halwa business in Tirunelveli, Tamil Nadu, and the question of whether a registered trade mark holder could successfully fend off a passing off action brought by a prior user of the same trade name. The judgment delivered by Dr. A.K. Sikri, J. (with H.L. Dattu, C.J. concurring) is a landmark in Indian trade mark law, authoritatively settling the principle that common law rights arising from prior use are superior to and independent of statutory rights arising from registration. It affirmed, with clarity and scholarly depth, that the Trade Marks Act, 1999 does not bar a passing off action, and that registration of a trade mark merely recognises rights that already pre-exist in common law, without creating any new rights.
Factual and Procedural Background
The story of this case begins not in a courtroom but in a small shop on East Car Street in Tirunelveli Town, Tamil Nadu, in the year 1900. It was in that year that Mr. R. Krishna Singh started a business of selling halwa, a traditional sweet confection, in the town. What made this shop distinctive was its unique practice: it operated only for a few hours in the evening, opening at around 5:00 p.m. or 5:30 p.m. and remaining open till 10:30 p.m. or 11:00 p.m. daily, selling only one item — halwa. The quality of the halwa was so exceptional that consumers who purchased it and stored it at home found that the taste and quality lasted longer than usual. Over time, the public began calling this shop "Irruttukadai Halwa Shop," the word "Irruttukadai" meaning a dark shop, a reference to the fact that in the early days of the 1900s, only a single oil lamp used to be lit in the centre of the shop, which was later replaced by a single 40-watt bulb. Unlike other shops, no additional illumination was used as decoration. The shop, its name, and its distinctive practices became synonymous with quality.
After the death of Mr. R. Krishna Singh, the business was continued by his son Mr. Bijili Singh, who was also the husband of the respondent, P. Sulochana Bai. Mr. Bijili Singh carried on the business until his death in the year 2000, after which P. Sulochana Bai, his daughter-in-law and the respondent-plaintiff in these proceedings, took over the running of the shop. The product had by then achieved a unique identity — it was known as "Iruttukadai Halwa" not merely in Tirunelveli and Tamil Nadu, but also in other parts of India and even in foreign countries. The respondent got the trade mark "Iruttukadai Halwa" officially registered under the Trade Marks Act, 1999, with the registration being granted on 17-8-2007.
On the other side of this dispute stands S. Syed Mohideen, the appellant-defendant, whose father had noticed the goodwill enjoyed by the respondent's family business. Attracted by the reputation and proceeds flowing from the halwa trade, the appellant's father first opened a shop called "Raja Sweets" just opposite to Tirunelveli Railway Station, where halwa was sold along with savouries. Subsequently, the appellant opened another shop, 5 kilometres away from the respondent's shop, under the name "Nellai Raja Sweets," selling all kinds of eatables and decorating the shop with fancy lights. However, the respondent's business showed no decline. Thereafter, the appellant opened yet another shop at No. 1/1-A, Therkkuvasal, opposite to Tirunelveli Railway Station in Madurai Road, under the name "Tirunelveli Iruttukadai Halwa," to deceive the public into believing that the respondent had opened another shop at that address. On 26-6-2007, the appellant placed an advertisement in the Tamil Muyrasu newspaper daily, causing members of the public to enquire from the respondent whether she had opened another shop under the name Iruttukadai Halwa.
On 20-7-2007, the respondent issued a lawyer's notice calling upon the appellant to stop using her trade mark for selling sweets and savouries, since she had registered the trade mark "Irruttukadai Halwa" under the Trade Marks Act. The appellant sent a reply on 30-7-2007 refusing to comply. Consequently, the respondent filed a suit before the trial court seeking declaration, permanent injunction, and rendition of accounts. The appellant also got his trade mark "Tirunelveli Iruttukadai Halwa" registered under Section 25(2) of the Trade Marks Act, 1999, with the Registrar issuing a trade mark certificate dated 9-4-2008.
The trial court framed eleven issues, including questions of jurisdiction, mala fide use of the plaintiff's trade mark, loss of goodwill and reputation, proprietary rights, entitlement to declaration, permanent injunction, rendition of accounts, and destruction of materials bearing the plaintiff's trade mark. After examining two witnesses and twenty-seven documents produced by the respondent, and three witnesses and seven documents produced by the appellant, the trial court decreed the suit on 20-4-2011, holding that the respondent's family had started the business in 1900 and that she was the prior user of the trade mark "Iruttukadai Halwa," entitling her to declaration and injunction. Relief for rendition of accounts was denied. The High Court of Madras dismissed the appellant's appeal vide judgment dated 7-6-2013, affirming the trial court's findings and further observing that the trade mark "Iruttukadai Halwa" had become a household name in every nook and corner of Tamil Nadu, additionally supported by a famous Tamil song from the movie Samy which referred to the trade mark by name. The Supreme Court took up the matter by way of Civil Appeal No. 2758 of 2015 arising out of SLP (C) No. 12671 of 2014.
The Dispute
The core legal dispute before the Supreme Court revolved around a seemingly paradoxical situation: both the respondent-plaintiff and the appellant-defendant were registered proprietors of their respective trade marks — the respondent holding registration for "Iruttukadai Halwa" from 2007, and the appellant holding registration for "Tirunelveli Iruttukadai Halwa" from 2008. The appellant's primary argument was that since the Registrar under the Trade Marks Act had accepted his application for registration and issued a trade mark certificate dated 9-4-2008, there was no reason to injunct him from using his registered trade mark. He relied on Section 28 of the Trade Marks Act, 1999, which grants a registered proprietor exclusive rights to use the trade mark, arguing that once the Registrar has conferred a valid registration, a court cannot prevent him from using it.
The respondent, on the other hand, argued that the registration obtained by the appellant was irrelevant to the question of her superior rights, because she was not only the prior user of the mark since 1900 through her family, but also a prior registrant. She contended that the appellant had adopted the deceptive trade mark to misrepresent his business as hers, thereby encashing upon the goodwill built over more than a century. She maintained that the passing off action available to her under common law, saved expressly by Section 27(2) of the Trade Marks Act, 1999, was not defeated by the appellant's subsequent registration, and that the courts below were entirely correct in granting the decree of declaration and injunction.
An important factual feature of the dispute was that the respondent had not opposed the registration of the appellant's trade mark "Tirunelveli Iruttukadai Halwa" through the opposition procedure available under the Act, despite having the opportunity to do so. The appellant seized upon this as an argument to suggest that the registration should be treated as unimpeachable. The courts below, and ultimately the Supreme Court, rejected this argument, holding that the failure to oppose registration does not extinguish common law rights.
Reasoning and Analysis of the Judge
Justice Dr. A.K. Sikri authored a comprehensive and analytically rich judgment that proceeded through several distinct but interconnected lines of reasoning, examining the statutory framework, common law principles, comparative jurisprudence, and the specific facts on record.
The Court began by carefully dissecting Section 28 of the Trade Marks Act, 1999, which grants the registered proprietor the exclusive right to use the trade mark in relation to the goods for which it is registered, and also the right to obtain relief in case of infringement. However, the Court immediately noted that this reading of Section 28 cannot be done in isolation from the rest of the Act. Section 28(3) specifically addresses a situation where two or more persons are registered proprietors of identical or nearly resembling trade marks. It provides that in such a situation, the exclusive right to use the trade mark is not available to one registrant as against the other registered owner — each has the same rights as against third persons. Therefore, between the respondent and the appellant, both being registered proprietors, neither could claim infringement against the other on the basis of registration alone. The Court held at Para 27 that this provision gives concurrent right to both persons to use the registered trade mark in their favour, making it a matter of common sense that the respondent could not say her trade mark was infringed merely on the ground of registration when the appellant was also enjoying a valid registration.
This, however, was not the end of the matter. The Court then turned to the key interplay between Section 27(2) and Section 28(3) of the Act. Section 27(2) opens with the words "Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods or services as the goods or services of another person, or the remedies in respect thereof." The Court, at Para 30.1, held that these opening words make it crystal clear that passing off rights emanate from common law, not from the provisions of the Act, and are entirely independent of the rights conferred by the Act. Registration gives exclusive rights, but those rights are subject to the provisions of the Act — including the saving of common law passing off rights under Section 27(2).
The Court then examined Section 34 of the Trade Marks Act, 1999, which provides that nothing in the Act shall entitle the registered proprietor or registered user to interfere with the rights of a prior user. Reading Sections 34, 27, and 28 conjointly, the Court found that the rights of registration are expressly subject to Section 34, and that the scheme of the Act clearly recognises prior user rights as being superior to registration rights. Even a registered proprietor cannot disturb or interfere with the rights of a prior user. The overall effect is that the action for passing off, premised on the rights of the prior user who has generated goodwill, is unaffected by any registration granted under the Act.
The Court referred extensively to and relied upon N.R. Dongre v. Whirlpool Corpn., 1995 SCC OnLine Del 310 : AIR 1995 Del 300, decided by the Division Bench of the Delhi High Court, which was affirmed by the Supreme Court in N.R. Dongre v. Whirlpool Corpn., (1996) 5 SCC 714. In that case, the Delhi High Court had recognised that registration is not an indefeasible right and is subject to the rights of the prior user. This proposition was affirmed by the Supreme Court and was treated as settled law.
The Court then proceeded to explore the additional and independent reasons for the superiority of passing off rights over statutory registration rights. At Para 31 and 31.1, the Court explained the classical common law conception of passing off as an action in deceit, grounded in the principle that no person is entitled to carry on business on the pretence that the said business is that of another. The three essential ingredients — called the "classical trinity" — are goodwill owned by a trader, misrepresentation, and damage to goodwill. These were drawn from the celebrated English decision in Reckitt & Colman Products Ltd. v. Borden Inc., (1990) 1 WLR 491 : (1990) 1 All ER 873 (HL), commonly known as the "Jif Lemon" case, where Lord Oliver had distilled the earlier guidelines of Lord Diplock from Erven Warnink Besloten Vennootschap v. J. Townend & Sons (Hull) Ltd., 1979 AC 731 : (1979) 3 WLR 68 : (1979) 2 All ER 927 (HL), known as the "Advocaat case." The Indian Supreme Court had already accepted this principle in Laxmikant V. Patel v. Chetanbhai Shah, (2002) 3 SCC 65.
The Court explained at Para 31.2 that the applicability of passing off principles turns on examining which proprietor generated the goodwill through use of the mark or name in the business. Use of the mark confers rights in favour of the user and generates goodwill in the market. Consequently, the latter user of the mark cannot misrepresent his business as that of the prior right holder. This is precisely why prior user rights are considered superior to all other rights, including registered rights. The examination of rights in common law — based on goodwill, misrepresentation, and damage — is entirely independent of registered rights, making the registration status of both parties irrelevant for determining who generated the goodwill first.
The Court also drew upon the third independent reason at Para 32: that passing off is a broader remedy than infringement. It operates on the general principle that no person is entitled to represent his business as that of another, and is maintainable for diverse reasons other than that of registered rights. In support, the Court relied upon Kerly's Law of Trade Marks and Trade Names, 14th Edition, Thomson, Sweet & Maxwell South Asian Edition, which recognises that even where a trade mark infringement action fails, a passing off action may still succeed on the same evidence, and that registration is no defence to a passing off action.
The fourth reason, enumerated at Para 33 and 33.2, rested on what the Court described as a "well-settled principle" in trade mark law: registration merely recognises rights which are already pre-existing in common law and does not create any new rights. The rights in common law can be acquired purely through use, and the registration rights were introduced later to make these rights equivalent to those of a public user of such mark. In case of conflict between two registered proprietors, the evaluation of better rights in common law is essential, because the common law rights would enable the court to determine whose rights are better and superior, and which of the two registered proprietors' common law rights have been recognised in the form of registration.
This principle had been expressed by the Division Bench of the Delhi High Court in Century Traders v. Roshan Lal Duggar & Co., 1977 SCC OnLine Del 50 : AIR 1978 Del 250, at Para 10, and also by the Bombay High Court in Sunder Parmanand Lalwani v. Caltex (India) Ltd., 1965 SCC OnLine Bom 151 : AIR 1969 Bom 24, citing observations of Llyod Jacob, J. in Vitamins Ltd.'s Application, In re, (1956) 1 WLR 1 : (1955) 3 All ER 827 : 1956 RPC 1, and also the decisions of L.D. Malhotra Industries v. Ropi Industries, 1975 SCC OnLine Del 172. All of these established unanimously that registration does not confer any new right to the mark claimed, or any greater rights than what already existed at common law and at equity without registration. Registration merely facilitates enforcement and establishes a public record, but the trade mark exists independently of the registration.
On the question of the appellant's argument that the respondent had failed to oppose his registration, the Court held this to be of no legal consequence to the passing off action. The procedure under Chapter III of the Act (Sections 18 to 26) pertaining to registration gives the public an opportunity to oppose; the Registrar also considers whether the mark as a whole is likely to create confusion. In the present case, no opposition was made by the respondent when the appellant's application was being processed. But this did not extinguish her common law rights, since those rights are preserved by Section 27(2) regardless of what happens in the registration process.
The Final Decision of the Court
Applying all the above principles to the facts of the case, the Supreme Court at Para 34 found the judgment of the High Court affirming the trial court's decree to be flawless and not warranting any interference. The respondent had established through a plethora of evidence that the trade mark "Iruttukadai Halwa" had been used by her and her predecessors continuously since the year 1900. The business had become a household name associated with the respondent's family. The Court noted with particular satisfaction that the fame of the mark had been independently corroborated by an article published in Ananda Viketan, a weekly Tamil magazine, dated 14-9-2003, describing the high quality of the halwa sold by the respondent-plaintiff, and also by the appearance of the name in a Tamil song from the movie Samy, which when repeatedly played across Tamil Nadu further entrenched the mark as exclusively associated with the respondent.
The Court held that since the respondent had proven prior use of the mark for about a century, no one could claim the name "Iruttukadai Halwa" as their own except the respondent. Furthermore, the respondent was not only the prior user but also the prior registrant, having registered the mark on 17-8-2007, prior to the appellant's registration of "Tirunelveli Iruttukadai Halwa" on 9-4-2008. The appeal was accordingly dismissed with costs quantified at Rs 50,000.
Point of Law Settled
This judgment is a definitive statement on several important propositions of trade mark law that are now settled beyond doubt. Registration of a trade mark under the Trade Marks Act, 1999, is not a defence to a passing off action, and the Act itself does not bar such an action, as expressly preserved by Section 27(2). Registration merely recognises and gives formal recognition to rights that pre-exist in common law; it does not create any new rights. The rights of a prior user are superior to those of a registered proprietor, and even a validly registered proprietor cannot interfere with or disturb the common law rights of a prior user, as mandated by Section 34 of the Act. Where two registered proprietors of identical or nearly similar trade marks are in conflict, the court must examine and evaluate their respective rights in common law — based on goodwill, use, and misrepresentation — rather than merely their registration status, in order to determine whose rights are superior. A passing off action is a broader remedy than an infringement action and can succeed even where the defendant holds a valid registration. The failure to oppose registration through the statutory procedure does not extinguish or waive common law rights. The three ingredients of a passing off action — goodwill owned by a trader, misrepresentation in the course of trade, and damage or likely damage to goodwill — constitute the classical trinity that any claimant must establish to succeed.
Case Details
Title: S. Syed Mohideen Vs. P. Sulochana Bai
Reported As: (2016) 2 Supreme Court Cases 683
Date of Order: March 17, 2015
Case Number: Civil Appeal No. 2758 of 2015 (arising out of SLP (C) No. 12671 of 2014)
Court: Supreme Court of India
Hon'ble Judges: H.L. Dattu, C.J. and Dr. A.K. Sikri, J. (Judgment delivered by Dr. A.K. Sikri, J.)
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
S. Syed Mohideen v. P. Sulochana Bai, (2016) 2 SCC 683 — Trade Marks Act, 1999, Ss. 27(2), 28, 34 — Prior user rights superior to registered trade mark rights — Passing off action not barred by registration — Registration merely recognises pre-existing common law rights and does not create new rights — Where two registered proprietors of identical or similar trade marks conflict, court must evaluate better rights in common law to determine superior entitlement — Three ingredients of passing off: goodwill owned by trader, misrepresentation in course of trade, and damage to goodwill — Failure to oppose registration does not extinguish common law rights of prior user — Respondent-plaintiff's family running halwa business under trade name "Iruttukadai Halwa" since 1900, registered in 2007 — Appellant registered "Tirunelveli Iruttukadai Halwa" in 2008 — Held: respondent being prior user and prior registrant entitled to injunction against appellant — Passing off action maintainable notwithstanding appellant's registration — Appeal dismissed with costs of Rs 50,000.
