TOSHIBA vs TOSIBA: When a Famous International Trademark Loses Its Ground for Non-Use — Supreme Court Reverses Rectification Order
Introduction
The world of trademark law rests on a delicate balance between two competing interests. On one side stands the trademark owner who has built a global reputation under a particular name and wishes to protect it even in markets where the goods may not yet be actively sold. On the other side stands the domestic trader who has been using a similar name in actual trade for years and feels threatened by the looming presence of a foreign giant's registered mark. When does non-use of a registered trademark justify removing it from the register? Who can ask for such removal, and under what circumstances should a court or registry exercise its discretion to grant or refuse rectification? These were the profound and practically significant questions that came before the Supreme Court of India in the landmark case of Kabushiki Kaisha Toshiba versus TOSIBA Appliances Co. and Ors., decided on 16th May 2008. The judgment, delivered by a Bench of Justices S.B. Sinha and L.S. Panta, overturned concurrent findings of the Deputy Registrar of Trade Marks and two levels of the Calcutta High Court, and laid down important principles on the interpretation of Sections 46 and 56 of the Trade and Merchandise Marks Act, 1958, particularly concerning non-use, bona fide intention, and the concept of a "person aggrieved."
Factual and Procedural Background
The appellant, Kabushiki Kaisha Toshiba, is a Japanese corporation of considerable historical and industrial significance. Its origins go back to 1857 when it began operations as Shibaura Engineering Works. In 1890, a company called Hakunetshu-Sha and Company Ltd. established Japan's first plant for electric incandescent lamps. This company was later renamed Tokyo Electric Company in 1899. Eventually, Shibaura Engineering Works Company Ltd. merged with Tokyo Electric Company to form Tokyo Shibaura Electric Company in the year 1939. The name "TOSHIBA" is itself derived from this corporate history — the syllable "TO" was taken from "Tokyo" and "SHIBA" was taken from "Shibaura." In 1984, the company was formally renamed Kabushiki Kaisha Toshiba, or Toshiba Corporation, and this change was duly reflected in the Indian trademark register as well.
The appellant had been building its trademark presence in India for many decades and had acquired approximately 35 trademark registrations in India. Specifically relevant to this dispute, it had obtained registration of the trademark "TOSHIBA" in Class 7 — which covers machines and machine tools including motors, electric washing machines, compressors, spin dryers and similar goods — under Trade Mark No. 273758, registered on 26th July 1971. It had also obtained registrations in Class 9 covering various electronics and electrical goods (registration number 273759) and in Class 11 covering lamps, ovens, water heaters, fans, toasters and similar goods (registration number 273760), both also registered on 26th July 1971. Additionally, logo-based registrations numbered 160442 and 160443 dated 5th September 1953 existed in Classes 9 and 11 respectively. Under Section 32 of the Act, after the expiry of seven years from registration, a mark becomes conclusive as to its validity. The appellant's Class 7 registration had crossed this seven-year threshold by 1978 and had been renewed continuously, with its validity extended up to 2016.
The respondent, TOSIBA Appliances Co., is an Indian company which had been in the business of making and selling domestic electrical appliances such as auto irons, toasters, extension cords, table lamps, ovens, and similar goods under the brand name "TOSIBA" since the year 1975. It is important to notice the visual and phonetic similarity between the two marks — TOSHIBA and TOSIBA — which differs only by the absence of the letter "H" in the respondent's version.
The dispute had been brewing for some years before it formally erupted. In April 1989, the appellant sent a strongly worded legal notice to the respondent demanding that it stop using the mark "TOSIBA" in relation to electrical goods including electric irons. The notice described the TOSHIBA mark as one of the most well-known trademarks globally and stated that the respondent's mark was phonetically and visually deceptive. The respondent did not reply to this notice. Instead of complying or responding, the respondent took an aggressive legal step by filing an application before the Registrar of Trade Marks, Calcutta, being Application No. CAL 573, under Sections 46 and 56 of the Trade and Merchandise Marks Act, 1958 read with Rule 94 of the Rules. The application sought rectification of the appellant's registered trade mark No. 273758 in Class 7 by having it removed from the register on the ground of non-use. Two other similar applications were also filed regarding the Class 9 and Class 11 registrations, though they were not the central focus of the Supreme Court proceedings.
The respondent in its rectification application alleged that it had been using the mark "TOSIBA" in respect of domestic electrical appliances since 1975, that the appellant's registered mark was not distinctive of the appellant's goods on the date of commencement of the proceedings, and that the mark offended certain provisions of the Act. The respondent also stated that the threats issued by the appellant via the legal notice were unjustified and that the appellant had no real business in India.
The appellant countered this by placing on record evidence relating to India's Import and Export Policy for the years 1985 to 1992, showing that electric motors, compressors, generators, and washing machines were restricted or limited permissible items for which import required a licence from the Government of India. This was a crucial piece of evidence as it explained why the appellant had not been actively selling washing machines and spin dryers in India despite holding a registration for them.
By an order dated 12th May 1992, the Deputy Registrar of Trade Marks partially allowed the respondent's rectification application and directed that the goods "washing machines" and "spin dryers" be deleted from Trade Mark No. 273758 in Class 7. Rectification was also directed in the connected applications.
The appellant challenged this before the Calcutta High Court under Section 109 of the Act. By order dated 28th September 1993, a learned Single Judge of the Calcutta High Court upheld the Deputy Registrar's order insofar as it related to Section 46(1)(a) of the Act — concerning lack of bona fide intention to use the mark at the time of registration — but rejected the respondent's plea under Section 46(1)(b), which concerns continuous non-use for a period of five years. The Single Judge made notable observations to the effect that the respondent had never manufactured or sold washing machines or spin dryers at all and had no finalised plans to do so, going so far as to say that any claim to the contrary made before the Deputy Registrar "was a misstatement." However, the Single Judge still upheld the rectification on the ground that the appellant, given the government restrictions on imports prevailing in 1971, could not have had a bona fide intention to use the mark for washing machines and spin dryers in India at that time.
The appellant then preferred an intra-court appeal before the Division Bench of the Calcutta High Court, which dismissed the appeal by a judgment and order dated 8th December 2005. The Division Bench upheld the Single Judge's findings regarding the respondent's status as a "person aggrieved" and affirmed the rectification under Section 46(1)(a). The respondent also filed cross-objections in that appeal seeking rectification under Section 46(1)(b) as well, but the Division Bench declined to examine this question in detail, holding that the case under Section 46(1)(a) was so clear that it did not need to address the cross-objection. The appellant then approached the Supreme Court of India by way of a Special Leave Petition, which was converted into Civil Appeal No. 3639 of 2008.
Meanwhile, separately, the appellant had also filed a suit in the Delhi High Court against the respondent seeking a permanent injunction restraining the respondent from using the mark "TOSIBA" or any deceptively similar mark in respect of electrical goods. That suit was still pending at the time this matter was heard by the Supreme Court.
The Dispute
The dispute before the Supreme Court essentially had three interlocking dimensions. The first was whether the respondent — an Indian company using the mark "TOSIBA" for domestic electrical appliances but admittedly never having manufactured or sold washing machines or spin dryers — could be considered a "person aggrieved" within the meaning of Section 46 of the Act so as to have the legal standing to file a rectification application. The second was whether the conditions required under Section 46(1)(a) of the Act — namely, absence of bona fide intention to use the mark at the time of registration and actual non-use — were truly satisfied in the facts of this case. The third was whether the Registrar and the High Court had correctly exercised their discretionary jurisdiction in ordering rectification, or whether special circumstances — specifically, the government-imposed restrictions on imports of washing machines — and the broader equities of the case should have led to a different outcome.
The appellant's senior counsel, the eminent Fali S. Nariman, argued that since the respondent had never been in the business of manufacturing or selling washing machines or spin dryers, it was not a "person aggrieved" and therefore had no locus standi to seek rectification of the appellant's mark in respect of those goods. He further argued that the mark "TOSHIBA" being a globally famous and invented word, the spirit of Section 47 — which provides for defensive registration of well-known trade marks — should have been considered. He contended that the fact that the appellant had no intention to abandon the mark should have been taken into account, and that if non-abandonment was established, the Section 46(3) defence — which excuses non-use attributable to special circumstances in trade rather than any intention to abandon — should logically have been applied even to Section 46(1)(a) and not merely to Section 46(1)(b).
The respondent's counsel countered that since the application was filed as a composite petition under both Sections 46 and 56, the respondent had locus standi as a "person aggrieved" under the wider definition applicable to Section 56, which serves public interest. He also argued that having been served with a legal notice threatening action, the respondent plainly had a legitimate grievance and therefore qualified as an aggrieved party. He further urged that since no injunction had been obtained against the respondent for over seventeen years, the appellant's commitment to the matter was questionable.
Reasoning and Analysis of the Court — Including Judgments and Their Context
The Supreme Court began its analysis by carefully examining the relevant statutory provisions. Section 46(1) of the Trade and Merchandise Marks Act, 1958 allows for the removal of a registered trademark from the register on an application made by any person aggrieved. This removal can be ordered on either of two grounds mentioned in Clause (a) and Clause (b) of the section. Clause (a) requires proof that there was no bona fide intention to use the mark at the time of registration and that there has, in fact, been no bona fide use of the mark thereafter. Clause (b) deals with a simpler situation — a continuous period of five years or longer during which the registered mark was not used in bona fide commerce. Section 46(3) provides a saving clause for the Clause (b) scenario — if the non-use was due to special circumstances in the trade and not due to any intention to abandon the mark, such non-use will not be treated as non-use for the purpose of Clause (b).
The Court was categorical in its analysis that Clauses (a) and (b) operate in entirely different fields and that Sub-section (3) of Section 46, which provides the special circumstances defence, applies exclusively to cases falling under Clause (b) and not to cases under Clause (a). The Court rejected the appellant's contention that since Clause (a) and Clause (b) both use the language of "no intention to abandon," Sub-section (3) should apply to both. The Court observed that if this interpretation were accepted, no meaningful distinction would exist between the two clauses at all, which could not have been the legislative intent. The Court further noted that the two clauses are disjunctive and not cumulative — both can be invoked independently, and a combined application under both Sections 46 and 56 is permissible.
The Court relied on the earlier Supreme Court decision in American Home Products Corporation versus Mac Laboratories Pvt. Ltd. and Anr., reported as MANU/SC/0204/1985 and also as AIR 1986 SC 137, which had made the exact distinction between Clauses (a) and (b) with great clarity. That judgment had held that under Clause (b), if the prescribed period of five years of non-use has elapsed, the fact that the registered proprietor had a bona fide intention to use the mark at the time of registration becomes irrelevant — the mark becomes liable to removal unless protected by Section 46(3). Under Clause (a), however, bona fide intention at the time of registration is central — if such intention existed, the mere fact that the mark was not used for a period shorter than five years will not result in removal. The Court in the present case embraced this analysis and declined to extend Sub-section (3) beyond its textual scope of application to Clause (b).
The Court also relied upon several decisions on the question of intermittent use and special circumstances. It referred to Plaza Chemical Industries versus Kohinoor Chemicals Co. Ltd., reported as MANU/MH/0136/1975 and AIR 1975 Bom 191; Express Bottlers Services Pvt. Ltd. versus Pepsico Inc and Ors., reported in 1988 (1) CLJ 337; Bali Trade Mark Rectification before the Chancery Division, reported in 1966 (16) RPC 387; Bali Trade Mark Rectification before the Court of Appeal, reported in 1968 (14) RPC 426; and the BULOVA Trade Mark Rectification before the Chancery Division, reported in 1967 (9) RPC 229. These cases collectively established the principle that where use has been intermittent rather than totally absent, Clause (b) of Section 46(1) does not apply. The Court noted this to explain why Clause (b) stood on a different footing and why its associated saving provision under Sub-section (3) had a specific and limited purpose.
On the critical question of who qualifies as a "person aggrieved," the Court engaged in a thorough discussion. It drew upon the authoritative Supreme Court decision in Hardie Trading Ltd. and Anr. versus Addisons Paint and Chemicals Ltd., reported as MANU/SC/0705/2003 and also as 2003(27)PTC241(SC). That case had held that the concept of "person aggrieved" under Section 46 concerns a private interest, while under Section 56 it serves a broader public interest. As a consequence, the standard for locus standi under Section 56 is more liberal than under Section 46. The Court in Hardie Trading had explained that under Section 46, the test is whether the person filing for rectification would, in some practical and not merely fanciful sense, be damaged or injured if the trademark were allowed to remain on the register. The Hardie Trading decision had also quoted from a much older English authority — the matter of Trade Mark No. 70,078 of Wright, Crossley and Co., from 1898, reported in 15 RPC 131 — to the effect that a person claiming to be aggrieved must show that in some possible practical way they may be damaged or injured if the mark is allowed to stand, and not merely a fantastic or theoretical possibility of injury.
The Supreme Court found that this was the precise aspect that had been overlooked by both the learned Single Judge and the Division Bench of the Calcutta High Court. The Single Judge had himself specifically found that the respondent had never manufactured or sold washing machines or spin dryers and did not even have any finalised plan to do so. He had characterised the respondent's contrary claim before the Deputy Registrar as a misstatement. Yet, he and the Division Bench proceeded to treat the respondent as a "person aggrieved" in relation to the deletion of washing machines and spin dryers from the appellant's Class 7 registration. The Supreme Court found this to be an error. If the respondent had never been in the business of washing machines or spin dryers and had no concrete intention to enter that business, it could not be said to suffer any practical injury from the appellant's registration of those goods. The respondent was, in the words of the 1898 English precedent, not demonstrating a "possible in a practical sense" injury but rather a "fantastic" and theoretical one.
The Court noted that while the respondent had faced a legal notice and an actual lawsuit from the appellant — which gave it legitimate grievance in some respects — those facts did not translate into locus standi to seek deletion of goods from the appellant's registration when it had never dealt in or intended to deal in those goods. The Court also took note of the equities from the appellant's side. Although the appellant had not been commercially selling washing machines or spin dryers in India, it had been maintaining service centres in multiple Indian cities — New Delhi, Bombay, Madras, Calcutta, Baroda, Bhopal, Cochin, and Bangalore — for repairing and servicing washing machines, among other products, belonging to those who had imported such machines. The appellant had also issued an advertisement in the Indian Express, New Delhi, on 27th August 1985, mentioning washing machines and their service centres. The Single Judge had found this single advertisement insufficient to constitute "use" of the mark under Section 2(2) of the Act, as there were no goods physically present in India for sale. The Supreme Court did not directly overturn this finding on use, but it factored the context into the overall discretionary calculus.
The Court observed that the balancing act between a registered proprietor's non-use and the equities of a third party should be guided by whether either party would actually be injured. Here, the respondent was freely using its mark "TOSIBA" in relation to its actual products — electric irons, fans, toasters and similar goods — and had never been injuncted against doing so. The respondent had suffered no commercial injury from the appellant's registration remaining on the register for washing machines and spin dryers, since the respondent had no business in those goods whatsoever. On the other hand, the Single Judge himself had acknowledged that "TOSIBA" is so similar to "TOSHIBA" as to give the appellant an indisputable right to demand that the respondent cease using that mark in relation to goods for which the appellant is registered, provided the registration could be maintained on the register.
The Supreme Court further disposed of the respondent's argument that it was entitled to urge the applicability of Section 46(1)(b) even without having filed a proper cross-appeal, on the principle analogous to Order XLI Rule 33 of the Code of Civil Procedure, relying on Ravinder Kumar Sharma versus State of Assam and Ors., reported as MANU/SC/0561/1999 and AIR 1999 SC 3571. The Court rejected this contention, holding that Clauses (a) and (b) of Section 46(1) are in two different watertight compartments, involving separate causes of action, separate ingredients and separate remedies. Since the causes of action are distinct, the analogy with Order XLI Rule 33 — which allows an appellate court to give relief to a party who has not appealed — was inapplicable. If the respondent wished to challenge the rejection of its case under Section 46(1)(b), it was required to file a proper appeal against that specific finding, which it had not done through the correct legal channel.
Final Decision of the Court
The Supreme Court allowed the appeal filed by the appellant and set aside the impugned judgment of the Division Bench of the Calcutta High Court dated 8th December 2005. The key ground for allowing the appeal was that the respondent was not truly a "person aggrieved" in relation to the goods of washing machines and spin dryers, given the undisputed finding that the respondent had never dealt in those goods and had no practical intention to do so. The Registrar and both levels of the High Court had missed this crucial aspect of the matter and had proceeded to order rectification without properly considering whether the respondent would suffer any practical injury. The Court made no order as to costs. Additionally, the Court requested the Delhi High Court — where the appellant's infringement suit against the respondent was still pending — to consider disposing of that suit as expeditiously as possible, given the long pendency of the controversy between the parties.
Point of Law Settled in the Case
The Supreme Court settled several important points of law through this judgment. It confirmed that Clauses (a) and (b) of Section 46(1) of the Trade and Merchandise Marks Act, 1958 are disjunctive and independent of each other, covering entirely different fact situations. It also confirmed that the saving provision in Section 46(3) — which excuses non-use due to special circumstances in trade — applies only to cases under Clause (b) and not to those under Clause (a). The Court further settled that a combined application for rectification under both Sections 46 and 56 of the Act is permissible in law. Most significantly, the Court clarified that the phrase "person aggrieved" under Section 46, which concerns a private interest, requires a practical and tangible possibility of injury to the applicant — a merely theoretical or fanciful possibility is not enough. A person who has never manufactured or sold the specific goods covered by a trademark registration, and who has no concrete plans to do so, cannot claim to be a "person aggrieved" in relation to the removal of those specific goods from the register. The Court also held that since Clauses (a) and (b) involve separate causes of action, a party that fails to separately appeal the rejection of its claim under one clause cannot ask the appellate court to consider it afresh under the principle of Order XLI Rule 33 of the Code of Civil Procedure.
Case Details
Title: Kabushiki Kaisha Toshiba Vs TOSIBA Appliances Co. and Ors.
Date of Order: 16th May 2008
Case Number: Civil Appeal No. 3639 of 2008 (Arising out of SLP (C) No. 5542 of 2006)
Neutral Citation: MANU/SC/2223/2008
Equivalent Citations: AIR 2009 SC 892; (2008) 10 SCC 766; 2008 (37) PTC 394 (SC); 2008 (8) SCALE 354; MIPR 2008 (2) 195
Name of Court: Supreme Court of India
Name of Hon'ble Judges: Justice S.B. Sinha and Justice L.S. Panta
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
Kabushiki Kaisha Toshiba versus TOSIBA Appliances Co. and Ors. — Supreme Court of India — Civil Appeal No. 3639 of 2008 — Decided on 16th May 2008
Held: Clauses (a) and (b) of Section 46(1) of the Trade and Merchandise Marks Act, 1958 are disjunctive and independent, covering different situations. Section 46(3), which excuses non-use due to special circumstances in trade so as to save the mark from removal, applies exclusively to cases under Clause (b) and not to Clause (a). A combined application for rectification under both Sections 46 and 56 of the Act is permissible. The term "person aggrieved" under Section 46 refers to private interest and requires a practical — not fanciful or theoretical — possibility of injury to the applicant. A person who has admittedly never manufactured or sold the specific goods covered by a registered trademark, and who has no concrete intention to enter that trade, cannot qualify as a "person aggrieved" in relation to those goods for the purpose of seeking rectification. Since the respondent had never dealt in washing machines or spin dryers and had no plans to do so, it had no locus standi to seek removal of those goods from the appellant's Class 7 trademark registration. Principles analogous to Order XLI Rule 33 CPC cannot be invoked to raise a separate and distinct ground under Section 46(1)(b) without filing a proper appeal against the rejection of that ground. Appeal allowed; impugned judgment set aside.
Acts referred: Trade and Merchandise Marks Act, 1958 — Sections 2(2), 6, 11, 12, 29, 32, 45, 46, 46(1), 46(3), 47, 47(1), 48, 56, 56(2), 56(3), 57, 57(2), 69, 109, 109(2), 109(5), 109(6); Code of Civil Procedure — Order XLI, Rule 33.
Cases referred: American Home Products Corporation v. Mac Laboratories Pvt. Ltd. and Anr., MANU/SC/0204/1985, AIR 1986 SC 137; Hardie Trading Ltd. and Anr. v. Addisons Paint and Chemicals Ltd., MANU/SC/0705/2003, 2003(27)PTC241(SC); Ravinder Kumar Sharma v. State of Assam and Ors., MANU/SC/0561/1999, AIR 1999 SC 3571; Plaza Chemical Industries v. Kohinoor Chemicals Co. Ltd., MANU/MH/0136/1975, AIR 1975 Bom 191; Express Bottlers Services Pvt. Ltd. v. Pepsico Inc and Ors., 1988 (1) CLJ 337; Bali Trade Mark (Rectification Ch.D.), 1966 (16) RPC 387; Bali Trade Mark (Rectification C.A.), 1968 (14) RPC 426; BULOVA Trade Mark (Rectification Ch.D.), 1967 (9) RPC 229; The Trade Mark No. 70,078 of Wright, Crossley and Co., (1898) 15 RPC 131.
Cases overruled: Kabushiki Kaisha Toshiba (Toshiba Corporation) vs. Toshiba Appliances Co. and Ors., MANU/WB/0414/2005 (Calcutta High Court).
