Section 124 [see End Note 1] of the Trademarks Act, 1999 (the Act) provides for the possibility of stay of a trademark infringement suit in case there is a challenge to the registered trademark which is the subject matter of the suit. The seemingly simple provision (including its predecessor Section 111 of the old 1958 Act) had led to conflicting views until the law was finally settled by the Supreme Court in the landmark ruling of ‘Patel Field Marshal’ case [see End Note 2] in November 2017. This article shall discuss the recent cases where the Supreme Court ruling has been applied and their implications.
Subsequent to the Supreme Court judgement, there have been few cases where the law under Section 124 has been applied in various ways, particularly by Delhi High Court, such as in Nestle v. Shree Shankeshwar Utensils [see End Note 3] where the Court, while discussing Section 124 in the context of Patel Field Marshal case held that permission of Court is not required for a party to a trademark infringement suit to initiate rectification proceedings before the IPAB.
On the other hand, in Abbott v. Raj Kumar [see End Note 4], the issue, inter alia, was whether, in a case where trademark rectification was not pending before the Intellectual Property Appellate Board (IPAB) prior to the filing of the suit, mere plea of invalidity would be sufficient for the Court to invoke Section 124 in view of the Patel Field Marshal Case. In this case, the Plaintiff was seeking stay of trial under Section 124 as it wanted to invalidate the registration of the defendant and an issue to be framed in the suit to the effect. In its judgement dated 3-1-2018, the Court held that mere plea of invalidity is not sufficient but the party (Plaintiff in this case) would have to show material and substantial pleadings to enable the Court to take a prima facie view and to frame an issue which must be in terms of Order XIV Rule 1 of the Code of Civil Procedure, 1908 (CPC). The Court found that the plaintiff had not raised substantial ‘invalidity’ arguments in their pleadings detailing their grounds for invalidity of registration. However, the Court, referring to the legal principle that “litigant ought not to suffer for poor pleadings” (Court relied on Teva Pharmaceutical Industries Ltd. v. Natco Pharma Ltd. [see End Note 5] and in view of the fact “that Patel Field Marshal (supra) is of recent vintage”, held that “benefit should be given to the plaintiff and the aforesaid weakness in the pleadings of the plaintiff should not be allowed to come in the way of the plaintiff to now have an issue on the said aspect framed” [see End Note 6]. Further, the Court also took note of the fact that there is an interim injunction operating in favour of the plaintiff which was upheld by the division bench. Accordingly, the Court allowed the request for stay of the suit till such time the IPAB decides the validity of the defendant’s trademark registration.
Another recent decision dated 23-4-2018, but with different facts, has been delivered by the Delhi High Court in the case of Country Inn v.Country Inns and Suites [see End Note 7] wherein there is an independent and exhaustive analysis of Patel Field Marshal. Notably, this decision does not refer to the Abbott case or the Nestle case of the same court. In this case, the defendants filed an interim application for framing of issue on invalidity and stay of trial under Section 124, after several years of commencement of suit and trial. The present case is a judgement on the same interim application.
The case pertains to a trademark infringement that was initiated by the Plaintiff in 2008. The plaintiff claimed to be the registered proprietor of the mark “Country Inn” since 1983. It claimed to be using it in respect of hotels, motels and restaurants and have since gathered immense goodwill. The defendant i.e. ‘Country Inns and Suits by Carlson, Inc’ are registered proprietors of “COUNTRY INN & SUITES BY CARLSON”. The registration of defendant is from 2002. Plaintiff had filed rectification petition against the defendant’s registered trademark. In 2011, the Court framed the issues and one of the issues pertained to validity of the registration of the defendant’s trademark. In September 2017, the defendant initiated rectification proceedings against the plaintiff’s trademark registration before the IPAB and by this time, trial had already commenced and continued for a few years. In 2018, an application for stay of trial under Section 124 was sought by the defendants invoking their rectification application filed before the IPAB which came for decision before the Court in this case.
The Court framed the issue as follows: “… whether such a right of the Defendant in a suit for infringement to seek framing of an issue with respect to seeking permission of the Court to approach the IPAB for cancellation proceedings of the registered trademark can be filed even though trial in the suit has commenced, and issues have been framed around seven years prior to filing the [cancellation] proceedings by the Defendant before the IPAB”.
The court conducted a thorough analysis of the Patel Field Marshaljudgement in the context of the facts before it and observed as follows:
- A stay of infringement suit under the Section 124 is possible only when the defendant requests for framing an issue in the suit on the validity of the plaintiff’s trademark registration for an already pending rectification/invalidity proceedings. In the alternative, it is also possible when the infringement court finds that the defendant’s application for rectification (post the infringement suit) is prima facie tenable.
- In case the civil court finds the plaintiff’s registration valid, the defendant’s would have to find remedy in appeal. Defendant, at this point cannot seek/initiate cancellation proceedings before the IPAB.
- Lastly and most importantly, the right or the window to challenge the validity of the plaintiff’s registration is limited and not absolute/perpetual. After securing the leave of the civil court for commencing rectification proceedings, if a defendant does not file any cancellation proceedings before the IPAB, the Court interpreted the findings of Patel Field Marshal case to hold that the opportunity to raise such challenge would get forfeited for good. The Court held that same consequence would follow if the defendant fails to request the infringement civil court to invalidate the registration by framing an issue to this effect.
In the present case, the Court took serious note of the fact that the issues had been framed and trial had commenced many years ago for a suit that was filed in 2008. The Court was unimpressed by the fact that even in the written statement filed by defendant in response to the suit in 2009, there was no tenable plea of invalidity. Even when issues were framed in 2011, no such plea was raised or pleadings amended to that effect. It was only in September 2017, after plaintiff had led substantial evidence in the suit for infringement, that the rectification proceedings were filed by defendants before the IPAB and then in 2018, permission of the Court was sought to frame an issue to that effect in the suit and to secure stay of the suit. The Court concluded that the approach of the defendant was a mala fide attempt to prolong the suit and found that the window for the defendant to challenge the plaintiff’s mark had long been closed when the trial commenced. Accordingly, the defendant’s motion for framing of issue on invalidity of plaintiff’s mark and stay of suit was dismissed with costs of INR 200,000 imposed on the defendants.
(A) The decision in Country Inn case and Abbott case are welcome as they not only authoritatively applied the Supreme Court ruling, but also made it clear that any challenges to the validity of the trademark in an infringement suit must be credible and timely made or such a window would be shut down for good.
(B) It is also noteworthy that the High Court has not shown rigidity in applying the Apex Court judgement which is demonstrated in the Abbott case where the plaintiff was given benefit of doubt even if it was found that there were insufficient pleadings on invalidity of the defendant’s registration. No such benefit was available to the defendant in Country Inn case.
(C) It is very important that in cases like Abbott where stay of the suit was granted for pursuing invalidation against defendant’s mark after having secured an interim injunction order, the Courts must remain conscious of giving strict time lines to avoid potential injustice to a defendant if the plaintiff were to lose the case.
(D) These cases, especially the Country Inn case, also raise an important point that in the post ‘Patel Field Marshal era’ it is almost mandatory for any defendant to at least attempt an invalidity plea against the plaintiff (and/or vice versa) because once issues are framed and trial begins any subsequent rectification/cancellation during the pendency of suit would not be permissible.
Needless to say, the above would be subject to the outcome in appeals against these decisions, if any.
[The author is a Joint Partner in IPR practice, Lakshmikumaran & Sridharan, New Delhi] End Notes:
1. Section 124 in The Trade Marks Act, 1999
124. Stay of proceedings where the validity of registration of the trade mark is questioned, etc.
—(1) Where in any suit for infringement of a trade mark—(a) the defendant pleads that registration of the plaintiff’s trade mark is invalid; or
(b) the defendant raises a defence under clause (e) of sub-section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant’s trade mark, the court trying the suit (hereinafter referred to as the court), shall,—
(i) if any proceedings for rectification of the register in relation to the plaintiff’s or defendant’s trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings;
(ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff’s or defendant’s trade mark is prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the Appellate Board for rectification of the register.
(2) If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub-section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings.
(3) If no such application as aforesaid has been made within the time so specified or within such extended time as the court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case.
(4) The final order made in any rectification proceedings referred to in sub-section (1) or sub-section (2) shall be binding upon the parties and the court shall dispose of the suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark.
(5) The stay of a suit for the infringement of a trade mark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction directing account to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit.
2. Judgement dated 29.1.2017 in CIVIL APPEAL NO. 4767-4769, 19937& 19938 OF 2017
3. Decision dated 05.04.2018 in CS(COMM) 106/2018
4. Decision dated 03.01.2018 in CS(OS) 3534/2012
5. (2014) 210 DLT 591 (DB)
6. Id. At Para 38
7. Decision dated 23.04.2018 in CS(COMM) No.902/2016