The Registrar of Trade Marks vs. Ashok Chandra Rakhit Ltd.: The Law on Disclaimer of Non-Distinctive Words in Trade Marks
Introduction
Every trade mark, as registered, may consist of a combination of elements — some distinctive and capable of identifying the goods of a particular trader, and others which are generic, common, or incapable of belonging exclusively to any one person. The law of trade marks has long grappled with the question of what should happen when a registered mark contains within it a word or element that is not distinctive and which no single trader can legitimately claim as his own. The mechanism devised by trade mark law to deal with this situation is known as a "disclaimer." A disclaimer is essentially a notation on the trade mark register stating that although a particular word forms part of a registered trade mark, the registration does not give the proprietor the exclusive right to use that word alone or separately. The Supreme Court of India, in its judgment dated April 15, 1955 in The Registrar of Trade Marks vs. Ashok Chandra Rakhit Ltd., addressed this question in depth and settled important principles regarding when and why the Registrar of Trade Marks may properly exercise the power to insert a disclaimer. The word at the centre of the controversy was "Shree" — a word of deep religious and cultural significance in India, widely used by Hindus as an auspicious symbol. The judgment remains a foundational authority on the scope, purpose, and limits of the disclaimer power under Indian trade mark law.
Factual and Procedural Background
The story of the trade mark in question begins as far back as the year 1897. A gentleman named Durga Charan Rakhit adopted a distinctive device as his trade mark in respect of ghee that he produced and marketed. This device, with some slight and immaterial modifications, eventually came to be registered as trade mark No. 3815. The mark was an elaborate and visually rich device. At the top was the word "Shree" written in bold Bengali characters. Below that was an ornamental figure consisting of a triangle and an inverted triangle together forming a Star of David-like shape, with the word "Shree" written in small Devanagari script at the centre. The words "TRADE" and "MARK" were written in English in an inclined manner on the left and right sides of the ornamental figure respectively. At the bottom appeared the words "Shree Durga Charan Rakhit" in Bengali. The entire ornamental figure was enclosed in a circle surrounded by twelve decorative petals. It is worth noting that throughout the proceedings, the directors of the respondent company themselves referred to this mark as "the said mark SHREE," and their ghee was commonly known in the market by that name.
Durga Charan Rakhit subsequently became insolvent, and all his properties, including the goodwill of his ghee business and the said trade mark, vested in the Official Assignee of Calcutta. On January 15, 1915, the Official Assignee sold the goodwill of the business including the trade mark at a public auction. A minor named Hem Dev Konch was declared the highest bidder. The sale was confirmed by a deed of assignment executed by the Official Assignee on January 27, 1915. On August 22, 1917, the father and natural guardian of the minor conveyed the goodwill, including all rights in the mark, to one Ashok Chandra Rakhit, who was the son of the original creator Durga Charan Rakhit. Ashok Chandra Rakhit then carried on the ghee business and marketed his product under this mark. He got his ownership of the mark advertised in the Calcutta Exchange Gazette on September 15, 1926 and registered a declaration of ownership with the Registrar of Assurances of Calcutta on December 22, 1926.
In 1932, a private limited company was incorporated under the Indian Companies Act, 1913, and Ashok Chandra Rakhit assigned the goodwill of his business and all rights in the mark to this newly formed respondent company. In 1933, the mark was also registered in the Trade Mark Registry at Hong Kong under the Hong-Kong Trade Marks Ordinance, 1909. The respondent company's business under this mark was considerable, with an annual turnover of between Rs. 10,00,000 and Rs. 15,00,000 and annual advertisement expenditure ranging between Rs. 10,000 and Rs. 39,000. The ghee marketed by the respondent company was, by the time of the proceedings, widely and popularly known as "Shree ghee" and was asked for under that name.
The respondent company's track record in asserting the mark was also significant. In 1934, two persons named Rajendra Prasad and Dilliram were convicted by the Chief Presidency Magistrate of Calcutta under Section 486 of the Indian Penal Code for infringing this mark, and this conviction was upheld by the Calcutta High Court. In 1935, another person named Chiranjilal Sharma was similarly convicted for the same offence.
When the Indian Trade Marks Act, 1940 came into force in 1942, the respondent company filed an application on August 21, 1942 for registration of its mark under the new Act. By a letter dated November 29, 1943, the Registrar of Trade Marks proposed that a disclaimer of the word "Shree" should be inserted as a condition of registration. The respondent company objected strongly through its agents' letter dated February 15, 1944, stating that "the trade mark Shree is very important in the device" and that "the ghee is commonly designated by the trade mark Shree." The company also filed a supporting affidavit. The Registrar did not then press his proposal, and the mark was duly registered as trade mark No. 3815 without any disclaimer.
Some years later, however, the Registrar took note of the fact that the word "Shree" was widely used by Hindus as an auspicious symbol placed even on letter heads and commercial correspondence, and that consequently it was not inherently capable of distinguishing one trader's goods from another's. Over time, a firm practice developed in the Trade Mark Registry that the word "Shree" would either be refused standalone registration or, if it formed part of a composite mark, a disclaimer would be mandatorily insisted upon. This practice had become so consistent that trade mark No. 3815 of the respondent company was the only registered trade mark containing the word "Shree" that did not carry a disclaimer. This perceived discrimination was pointed out and it was urged that the Registry should deal with all applicants uniformly and impartially.
Moved by these considerations, the Registrar initiated suo motu proceedings under Section 46(4) of the Trade Marks Act, 1940 and on March 8, 1947 issued a notice to the respondent company asking it to show cause why the register should not be rectified by inserting a disclaimer of the exclusive right to use the word "Shree." The respondent company responded by filing a detailed affidavit. After hearing arguments, the Registrar, by his decision dated March 24, 1950, directed rectification of the register by inserting a disclaimer in the following terms: "Registration of this Trade Mark shall give no right to the exclusive use of the word 'Shree'."
The respondent company appealed to the High Court at Calcutta under Section 76 of the Act. A Division Bench of the High Court, by its judgment dated August 23, 1951, reversed the Registrar's order. The High Court agreed that "Shree" had numerous meanings and that no trader could claim an exclusive right to it. However, the High Court held that the respondent company had never actually claimed any exclusive right to the word "Shree" separately, and therefore there was no sufficient ground for the Registrar to have inserted the disclaimer. The appeal was allowed and the Registrar's order was set aside. The High Court, recognising that the question was novel and of considerable importance for future practice at the Registry, granted a certificate under Article 133(1)(c) of the Constitution for the matter to be brought before the Supreme Court of India. Hence the present appeal by the Registrar.
The Dispute
The central dispute in this case turned on two related questions. The first was whether the Registrar of Trade Marks had validly exercised his discretionary power under Section 13 of the Trade Marks Act, 1940 to insert a disclaimer of the word "Shree" in the respondent company's registered trade mark. The second, and more fundamental, question was whether the mere fact that a trade mark proprietor has not expressly claimed an exclusive right to a particular non-distinctive word forming part of its mark is a sufficient reason to refuse to impose a disclaimer of that word.
The respondent company's case, as accepted by the High Court, was essentially that since they had never openly asserted any exclusive statutory right to the word "Shree" standing alone, there was no practical need for the disclaimer, and the Registrar's order was unwarranted. The Registrar's position, on the other hand, was that the respondent company's conduct and the statements of its own counsel clearly showed that it was in fact asserting a claim to the exclusive use of "Shree" through the registration of its composite mark, and that it was precisely to prevent such an extravagant claim that the disclaimer was necessary.
Reasoning and Analysis of the Court, Including Judgments Discussed
The judgment was delivered by Justice Sudhi Ranjan Das on behalf of a three-judge bench also comprising Justice S.B. Sinha and Justice N.H. Bhagwati.
The Court began its analysis by closely examining Section 13 of the Trade Marks Act, 1940, which is the provision governing disclaimers. That section provided that where a trade mark contains either a part that is not separately registered by the proprietor or any matter that is common to the trade or otherwise of a non-distinctive character, the tribunal — being the Registrar or the Court — may, as a condition of registration, require the proprietor to disclaim any right to the exclusive use of such part or matter to which the tribunal holds the proprietor is not entitled. An important proviso to the section made clear that a disclaimer would not affect any rights of the proprietor except those arising from the registration itself, thereby leaving intact any rights under common law or under the Indian Penal Code that the proprietor might have acquired through long use.
The Court identified four key features of Section 13 that needed to be properly understood.
The first feature was that the power to impose a disclaimer was not automatic even after the existence of the required facts was established. The section required as a threshold condition that one of two "jurisdictional facts" must first be present — either the mark contains a part not separately registered, or the mark contains matter common to the trade or of a non-distinctive character. But the existence of one of these jurisdictional facts, while necessary, was not by itself sufficient to justify the imposition of a disclaimer. The section used an enabling form — empowering the tribunal to impose a disclaimer — which meant the power was always a matter of discretion to be exercised judicially, not mechanically. In support of this principle, the Court referred to the observations of Lord Halsbury in Sharp v. Wakefield, LR 1891 AC 173, where the principle of judicial exercise of discretion was laid down, and to the English case of In re Albert Baker Co.'s Application and In re Aerated Bread Company's Application, LR [1908] 2 Ch. 86, commonly known as the A.B.C. case. In that case, Justice Eve had held, while dealing with Section 15 of the English Trade Marks Act of 1905, that the condition of disclaimer was one for the imposition of which some good reason ought to be established, rather than one which must be imposed unless good reason to the contrary was shown. The power was in an enabling form and must only be exercised for good cause shown.
The second feature of Section 13 was the question of how a High Court should approach an appeal from a Registrar's discretionary decision. The Court noted that Section 13 conferred discretionary power on the "tribunal," which by virtue of Section 2(n) of the Act meant both the Registrar and the Court. In deciding an appeal from the Registrar, the High Court would have a concurrent discretionary power. However, the Court emphasised, adapting the language of Lord Macnaghten in Eno v. Dunn, LR [1890] 15 AC 252, that it was the Registrar who was "in the first instance committed the discretionary power." If the Registrar had exercised that discretion in good faith and without violation of law, the High Court ought not to interfere merely because it might have exercised the discretion differently. The proper test for the High Court was that laid down by Lord Dunedin in In re F. Reddaway & Co. Ltd., [1926] 44 RPC 27: whether the Registrar had "really gone so wrong as to make it necessary to interfere with his discretion." The Supreme Court also noted the observations in In the matter of an application by the Diamond T. Motor Car Co., [1921] 38 RPC 373, regarding the approach of the Court when hearing appeals from the Registrar.
The third feature was the underlying purpose of Section 13. The Court noted that the real purpose of requiring a disclaimer was not to confer any direct benefit on rival traders or the general public, but to define the rights of the proprietor under the registration so as to minimise the possibility of extravagant claims being made by proprietors on the strength of their trade mark registrations. The Court referred to In re Smokeless Powder Co.'s Trade Mark, LR [1892] 1 Ch. 590, as an illustration of attempts by proprietors to expand the operation of their trade marks beyond legitimate bounds. The Court also referred to Greers Ltd. v. Pearman and Corder Ltd., [1922] 39 RPC 406 — known as the "Banquet" case — as an example of proprietors making exaggerated claims to exclusive use of parts of their marks in spite of having expressly disclaimed those parts.
The fourth feature the Court discussed was the proviso to Section 13, which preserved intact any rights the proprietor might have under any other law. A disclaimer only affected rights arising from the registration itself. The proprietor's rights acquired through long use — whether under common law or under the Indian Penal Code — were wholly unaffected by the disclaimer.
The Court then turned to the High Court's reasoning in the present case. The High Court had relied heavily on the English case of In re Cadbury Brothers' Application, LR [1915] 2 Ch. 307; 32 RPC 456, which had been decided under Section 9 of the English Act of 1905. In that case, the Registrar had declined registration because the mark contained the word "Tudor," which was a surname that could not be separately registered by him without the order of the Board of Trade. The Registrar had acted pursuant to an inflexible practice of refusing registration or insisting on a disclaimer wherever the mark contained such a word, without making any investigation into whether the word was distinctive or not. Justice Sargant had overruled the Registrar because on the evidence the word "Tudor" was actually distinctive and identified the goods of the applicant, and the Registrar had not made any finding on that question at all, acting purely on the basis of an inflexible mechanical practice.
The Supreme Court distinguished the Cadbury Brothers case carefully from the facts before it. In the present case, unlike in Cadbury Brothers, both the Registrar and the High Court had concurrently found as a matter of fact that the word "Shree" was not adapted to distinguish and was incapable of being exclusively owned by any trader. There was therefore no question of the word being distinctive in the way that "Tudor" had been found distinctive in relation to chocolates. Further, the Court noted that the Registrar in the present case had not acted purely on the basis of an inflexible mechanical practice. He had in fact adverted to several important substantive considerations that justified the disclaimer, and the High Court had failed to appreciate this.
The Court then turned to what it considered the most telling evidence in the case — the respondent company's own conduct and statements. Throughout the affidavit filed before the Registrar, the company had repeatedly referred to its trade mark as "the said mark SHREE." In the agents' letter of February 15, 1944 objecting to any disclaimer, the mark was referred to as "trade mark Shree" and it was stated to be "very important in the device." The company had claimed that its ghee was commonly designated by the trade mark "Shree" and asked for under that name. The two successful criminal prosecutions in 1934 and 1935 showed that the company actively asserted rights in the word. Most revealingly, when the company's counsel was asked by the Registrar how the company would be affected by a disclaimer of the word "Shree," counsel frankly stated that it was far easier to succeed in an infringement action than in a passing off action. The Supreme Court found this admission deeply significant. It demonstrated clearly that the respondent company's real purpose in resisting the disclaimer was precisely to avail of the easier remedy of an infringement action — which flows from registration — against any rival trader who might use the word "Shree" in their mark for ghee, without having to prove all the additional facts that would be required in a passing off action.
The Court also noted the observation of Lord Radcliffe in De Cordova and Others v. Vick Chemical Coy., [1951] 68 RPC 103, that if a word forming part of a mark has come in trade to be used to identify the goods of the owner, using that word as part of another trader's mark could amount to infringement of the whole mark, as confusion was likely to result. This observation might well have encouraged the respondent company to pursue infringement actions on the strength of the registration alone, without having to prove all the facts needed for a passing off action.
The Court also cited a number of other English cases to reinforce the principle that the registration of a composite device mark as a whole does not confer any exclusive statutory right to any individual word or part contained within it. Lord Esher's observation in Pinto v. Badman, 8 RPC 181, was referred to, to the effect that "the truth is that the label does not consist of each particular part of it, but consists of the combination of them all." The same principle was found in In re Apollinaris Company's Trade Marks, LR [1891] 2 Ch. 186, In re Clement and Cie, LR [1900] 1 Ch. 114, and the A.B.C. case referred to earlier. However, the Court pointed out that even accepting this principle, a disclaimer might still be necessary and appropriate because Section 13 itself, in clause (a), expressly contemplates a disclaimer in respect of parts contained in a mark that has been registered as a whole. Therefore, the argument that registration of the whole mark gave no exclusive right to any individual part was not a reason to refuse a disclaimer — if anything, it was one of the very jurisdictional bases on which a disclaimer might be imposed.
Final Decision of the Court
The Supreme Court allowed the appeal filed by the Registrar of Trade Marks and set aside the judgment of the High Court at Calcutta. The Court held that the Registrar had properly exercised his discretion in directing the insertion of a disclaimer of the word "Shree" in the respondent company's trade mark No. 3815. The High Court had been in error in interfering with the Registrar's discretion, particularly because it had failed to take into account the important consideration that the respondent company was, through its conduct and statements, effectively asserting a claim to the exclusive use of the word "Shree" by virtue of registration, and intended to use that registration to bring infringement actions against rival traders who might use the word "Shree" without having to prove the additional facts that a passing off action or a prosecution under the Indian Penal Code would require. The respondent company was directed to pay the Registrar's costs both in the Supreme Court and in the High Court.
Point of Law Settled in the Case
This judgment of the Supreme Court settles several important and enduring principles of trade mark law in India. First, the power to require a disclaimer under Section 13 of the Trade Marks Act, 1940 is a discretionary power and must be exercised judicially on good cause shown, not automatically merely because the jurisdictional facts exist. Second, when the Registrar has exercised this discretion in good faith and without violation of law, a High Court hearing an appeal ought not to substitute its own view for that of the Registrar unless the Registrar has gone so clearly wrong as to make interference necessary. Third, the true purpose of a disclaimer is to define the rights of a trade mark proprietor under the registration so as to prevent extravagant and unauthorised claims being made on the strength of registration for elements of the mark that are non-distinctive and cannot be exclusively owned by any trader. Fourth, the fact that a composite mark is registered as a whole does not mean a disclaimer of a non-distinctive element within it is inappropriate — on the contrary, such a disclaimer is specifically contemplated by the statute. Fifth, a disclaimer does not deprive the proprietor of any rights acquired through long use; those rights under common law, passing off law, or criminal law under the Indian Penal Code remain fully intact.
Case Details
Title: The Registrar of Trade Marks Vs. Ashok Chandra Rakhit Ltd.
Date of Order: April 15, 1955
Neutral Citation: MANU/SC/0052/1955
Equivalent Citations: AIR 1955 SC 558; [1955] 2 SCR 252
Name of Court: Supreme Court of India
Name of Hon'ble Judges: Justice S.B. Sinha, Justice N.H. Bhagwati, and Justice Sudhi Ranjan Das
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
The Registrar of Trade Marks vs. Ashok Chandra Rakhit Ltd., AIR 1955 SC 558
Supreme Court of India | April 15, 1955 | Justice S.B. Sinha, Justice N.H. Bhagwati, Justice Sudhi Ranjan Das
Trade Marks Act, 1940 — Sections 2, 13, 46(4) — Disclaimer of word forming part of registered trade mark — Non-distinctive word — Discretionary power of Registrar — Scope of appellate interference.
The respondent company was the registered proprietor of trade mark No. 3815 in respect of ghee, being an ornamental device containing the word "Shree" prominently in Bengali, Devanagari, and as part of the firm's name. The Registrar initiated suo motu proceedings and, by order dated March 24, 1950, directed insertion of a disclaimer stating that the registration gave no right to the exclusive use of the word "Shree," finding that the word was not adapted to distinguish and was in widespread auspicious and commercial use by Hindus. The Calcutta High Court reversed this order on the ground that the respondent had never claimed exclusive right to the word "Shree." The Registrar appealed.
Held, allowing the appeal: (1) The power to require a disclaimer under Section 13 of the Trade Marks Act, 1940 is discretionary and arises only on the existence of one of two jurisdictional facts specified in clauses (a) and (b) of the section. Even after the jurisdictional fact is established, a disclaimer must be imposed only for good cause shown. (2) Where the Registrar has exercised his discretion in good faith and not in violation of law, a High Court hearing an appeal ought not to interfere merely because it would have exercised the discretion differently; the test is whether the Registrar has really gone so wrong as to make interference necessary. (3) The true purpose of a disclaimer is to define the rights of the proprietor under the registration and to prevent extravagant claims to non-distinctive elements. The respondent company's own conduct and its counsel's frank admission that infringement actions were easier than passing off actions demonstrated that it was claiming effective exclusive rights to the word "Shree" through registration. This was precisely the situation the disclaimer provision was designed to prevent. (4) A disclaimer does not affect any rights of the proprietor except those arising from the registration; rights under common law, passing off actions, or criminal proceedings under the Indian Penal Code remain unaffected. The Registrar's order was restored.
