In this article, P Mohan Chandran who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Concept of Acquiescence in IP litigation in India.

CONCEPT OF ‘ACQUIESCENCE’ IN IP LITIGATION IN INDIA

In today’s world of ‘passing off’ and ‘infringement’, you must be extra vigilant in protecting your intellectual property (IP). You just cannot relax by merely filing an application or obtaining a registration, which may just be the first step in a long battle ahead. Whenever it comes to your cognizance that someone else is using your trade mark (TM), never let it go by easily because if you fail to take an action soon, you will be unable to act on it ever unless you are fortunate enough to prove fraudulent usage on part of the other party or person. This article aims to decode the concept of ‘acquiescence’ with respect to TM infringement with the help of the judicial cases in this matter.

WHAT IS ‘ACQUIESCENCE’ IN IP LAW?

Acquiescence implies your passive consent to allow another person to use your registered TM despite knowing that someone else is using your TM. So, once this ‘passive consent’ is not challenged by you within a statutory limit of five years, you lose the opportunity to sue the other party for infringement.

What the Law States

 “If a trader allows another person who is acting in good faith to build up a reputation under a trade name or mark to which he has rights, he may lose his right to complain, and may even by debarred from himself using such name or mark”.[1] 

According to section 33 of the Trade Marks Act, 1999, the other user can take up the defense of acquiescence against TM infringement provided, he has adopted and used the TM in good faith. Here, good faith implies ignorance or lack of knowledge on part of the other user of the existence of the TM infringed by him. However, the scope of this section has been challenged on several occasions. There is still plenty of uncertainty whether this doctrine can deny relief of permanent injunction.

What the Courts Say

If the owner of a TM, even after being aware of the use of his TM by another, fails to take any action against the other user and instead allows him to invest in publicizing his TM and expanding his business over a period of time, then the owner of the TM may not be entitled to the remedy of injunction against the other user of his TM, which he could otherwise bring upon to restrain the other user from the use of his TM. According to the TM law, such conduct of the TM owner conveys an ‘acquiescence’ i.e., implied consent by the TM owner in the use of his TM by the other user.

However, there is an exception to every rule and this one, too, has an exception. Where the other user has applied for registration of ‘your TM’, or for something similar, fully cognizant of the fact that such a TM already exists and you failed to take any action for a period of five years against him, then as per the law, you still have a right to sue the other user as long you prove the mala fide intentions of the defendant. The assumption of ‘good faith’ in such cases is not applicable, as there is clear dishonesty on the part of the defendant. In such cases, the court would well be justified in concluding that the defendant had an intention to commercially benefit from the plaintiff’s name and reputation. This has been the judicial trend in India and continues to be so as held in the case of Emcure Pharmaceuticals Ltd. vs. Corona Remedies Pvt. Ltd., where the High Court of Bombay upheld that “a mere failure to sue without a positive act of encouragement is no defense and is no acquiescence.” 

The judiciary in India has always acknowledged the fact that that a mere procrastination by the owner of a TM in filing a suit against the unauthorized use of his TM by the other user does not indicate the owner’s acquiescence in the use of his TM by the other user.

‘ACQUIESCENCE’ PRIOR TO THE TRADE MARKS ACT, 1999

 Before the enactment of the Trade Marks Act 1999, defense of ‘acquiescence’ was not clearly established under the Trade and Marks Act, 1958, or under the Trade Marks Act 1940, but still the other user of the TM used it as a defense against the owner of the TM under the relevant provision that referred to ‘acquiescence’ by the owner of the TM under the TM law applicable at that time. For instance, legal opinion allowed the other user of the TM to take the defense of ‘acquiescence’ within the expression ‘special circumstances’ in section 10(2) of the Trade Marks Act, 1940, which read as under:

Sec.10 (2): “In case of honest concurrent use or of other special circumstances which, in the opinion of the Registrar, make it proper so to do he may permit the registration by more than one proprietor of trade marks which are identical or nearly resemble each other in respect of the same goods or description of goods, subject to such conditions and limitations, if any, as the Registrar may think fit to impose.”[2] 

Later, when Trade Marks Act, 1940 was revoked and Trade and Merchandise Marks Act, 1958 was effectuated, the other user took the defense of ‘acquiescence’ against the owner of the TM within the expression ‘special circumstances’ under clause (1) of sub-section (b) of Section 30 of the Trade and Merchandise Marks Act, 1958, which read as under:

Sec.30. “Acts not constituting infringement: (1) Notwithstanding anything contained in this Act, the following acts do not constitute an infringement of the right to use of a registered trade mark – (b) the use by a person of a trade mark in relation to goods connected in the course of trade with the proprietor or a registered user of the trade mark if, as to those goods or bulk of which they form part, the registered proprietor or the registered user conforming to the permitted use has applied the trade mark and has not subsequently removed or obliterated it, or has at any time expressly or impliedly consented to the use of the trade mark.”[3] 

The Trade and Merchandise Marks Act, 1958, has been replaced by the Trade Marks Act, 1999. The Trade Marks Act, 1999, which came into force in 2003, has made a clear provision for the defense of ‘acquiescence’ for the other user of the TM against the owner of the TM under sec.33 of the Act.

Sec.33 of the Trade Marks Act, 1999 provides for the defense of ‘acquiescence’ to the other user of the TM against the owner of the TM and is an improvement over the earlier reference to the acquiescence within the statutory provision under the Trade and Merchandise Marks Act, 1958 and Trade Marks Act,1940. Sec.33 of the Trade Marks Act, 1999 establishes the defense of ‘acquiescence’ to the user of the TM against registered owner of the TM with more clarity.

‘ACQUIESCENCE’: NOT FOR THE FRAUDULENT OTHER USER 

The current Trade Marks Act, 1999 – according to sec.33 – clearly provides that the other user of the TM can take the defense of ‘acquiescence’ against the owner of the TM, if he has used the TM in good faith. It is to be noted that even before the enactment of the Trade Marks Act, 1999, while dealing with the defense of ‘acquiescence’ taken by the other user of the TM, judicial opinion in India had firmly established that there is no scope for the doctrine of ‘acquiescence’ where a fraud is involved. The Indian judiciary had persistently held that for the defense of ‘acquiescence’ under TM law, another pre-requisite is that the other user must have used the TM in ‘good faith’ and in total ignorance of the title of the owner of that TM.

The Indian judiciary has clearly established that the other user may prove that the owner of the TM failed to take action even though he was aware about the unauthorized use of his TM, and by his conduct encouraged the other user to use his TM, yet the other user cannot claim the benefit of the defense of ‘acquiescence’ if he is unsuccessful in proving that he had used the TM in good faith and in complete ignorance that the owner had already adopted the TM.

‘ACQUIESCENCE’: ‘DELAY’ COUPLED WITH ‘IMPLIED CONSENT’

When we trace back judgments of the Indian courts since the beginning, i.e., even before the enactment of the Trade Marks Law in India, we discover that judicial opinion in India had firmly established that simple delay by the owner of a TM in filing the suit against the unauthorized use of his TM by the other does not indicate owner’s acquiescence in the use of his TM by the other. For the defense of acquiescence against the owner of TM, the other user of the TM must prove that the owner of the TM, apart from procrastinating in taking action against the unauthorized use of his TM by the other user, also encouraged him to use his TM by his conduct.

In the case of Kanungo Media Pvt. Ltd. Vs. RGV Film Factory, 2007 (34) PTC 591 (Del), it was held that delay in taking action implies acquiescence and that the TM owner’s silence in claiming his rights amounted to a waiver of his rights.

In the case of Ramdev Food Products Pvt. Ltd. vs. Arvindbhai Rambhai Patel and Others, 2006, (33) PTC 281 (SC), the Supreme Court held that ‘acquiescence’ includes an element of delay, when a party allows the other to violate his right and expend money, and the conduct of the party is such that it is inconsistent with the claim for exclusive rights for TM. Mere silence or inaction does not constitute acquiescence. Action and conduct of both parties should be scrutinized to establish whether it would be unfair and arbitrary to prevent the defendants on the ground of delay. Loss of time, unless compounded with other factors, is usually not considered as a bar to grant injunction.

BURDEN OF PROOF ON THE OTHER USER

An analysis of several judicial judgments over a period of time proves that the person claiming the defense of acquiescence has the burden of proving the following:

1. That the TM holder was aware of the infringing activity.
2. That the TM holder was involved in an activity of encouragement – ‘encouragement’ here includes things such as inaction by the TM holder to send any specific notice of infringement to the other user.
3. That the other user has acted upon such act or omission to the detriment of the TM holder.

SELECT CASE LAWS ON ‘ACQUIESCENCE’ IN IP LITIGATION

Case Law-1:

Khoday India Limited vs The Scotch Whisky Association and others (Civil Appeal 4179 of 2008)

Date of Judgment: May 27, 2008

In this case, the issue was whether the TM ‘Peter Scot’ should be deleted from the Register of Trademarks (section 46 of the Trademarks Act provides for rectification of the register).

The following are the brief facts of the case:

In 1968, Khoday India Ltd (KIL) began manufacturing ‘Peter Scot’ whisky, and in 1974 got its TM registered. After 13 years, the Scotch Whisky Distillers Association (SWDA) – an industry body of distillers, blenders and exporters of Scotch whisky – moved the Assistant Registrar Trademarks for cancellation of the registered TM ‘Peter Scot’ because the TM was deceptively similar to a foreign mark (Scotch whisky).

The Supreme Court bench, comprising Justice Sinha and Justice LS Panta, gave the verdict in favor of KIL and said they could continue being the registered proprietor of the ‘Peter Scot’ TM. One of the factors that could have influenced the court to such a judgment was the delay or acquiescence by SWDA, i.e., SWDA waited for 12 long years to move the Registrar for deletion of the said TM, although it was aware about registration of the ‘Peter Scot’ TM as early as September 1974. The court held that because of the peculiar facts and circumstances of the case, the action of the respondents was barred under the principles of acquiescence/waiver.

To sum it up, the point driven home by Justice Sinha is that if you delay enforcing your rights, you run the risk of sending an indirect and wrong indication to the other user that you have either waived your rights or acquiesced it in the infringement.

Case Law-2

SRF Foundation & Another v. Ram Education Trust (1980/2014)

Date of Judgment: May 11, 2015

Facts of the Case:

‘SRF Foundation’ is the plaintiff No.1 in this case. It is a registered non-profit society involved in numerous social and community activities, including administering schools such as ‘The Shri Ram School’. The name/mark ‘Shri Ram’ has been used by the plaintiff No.1 since 1988, who has had a good reputation. While plaintiff No.2 has been involved in instituting schools in India and overseas. With this reputation, the plaintiffs achieved their objective to overcome the shortage of good schools by entering into an agreement with ‘Educomp Infrastructure and School Management’ to establish five schools under the name ‘The “Shriram Millennium School’. ‘Ram Education Trust’, the defendant, started “Shri Ram Global Pre-School” beside the plaintiff no. 1’s school in Gurgaon. The plaintiffs filed for the registration of TM, but subsequently withdrew and the defendant instead registered their TM. The plaintiffs, being the real brother of the defendant’s trustee, sent emails to his brother to caution the defendant of the reputation and goodwill of the name/mark and to prevent using it. However, the defendant continued to use the name/mark ‘Shri Ram’. The plaintiffs advertised declaring that the name/mark of the school does not belong to them. Subsequently, the defendant’s lawyer issued a legal notice to the plaintiffs to retract the advertisement and to tender a public apology. The plaintiffs filed a suit for permanent injunction, ‘passing off’ and account of profits in the Delhi High Court, apart from filing an application seeking interim injunction.

Arguments by the Plaintiffs

The plaintiffs argued that the inherent right to use the name ‘Shri Ram’ rested with each of the members of the Shri Ram family, subject to such right being restricted to its domain of business and not violating upon others rights. They had no objection if the said TM was used by the defendant in other activities or services, but not this activity, as they had been using the name/mark ‘Shri Ram’ for about two-and-a-half decades, the reason being they had goodwill in these services, contributing to monopoly over the name / mark. Though the plaintiff and the defendant belonged to the same family, yet the use by the defendant hampered the plaintiff’s reputation. Due to passing-off the services of the plaintiffs by the defendant, the public were ambiguous about which school belonged to whom. Thus, there was no authorized use of the name/mark. The use of ‘Shri Ram’ in the name/mark caused confusion and was deceptively similar.

The plaintiffs further contended that there was a prior use of the name/mark by them, as the name/mark had been used by them widely for several years before the defendant.

Arguments by the Defendants

The defendants argued that there were parallel rights to use the name/mark, and hence, the defendants were protected under the legacy of the Late Shri Ram Family. The defendant and the plaintiff shared a common family name. Therefore, there contended that there could not be a claim of any proprietary right or monopoly by the plaintiffs. The defendant’s schools are ‘Shri Ram Global School’, ‘Shri Ram Centennial School’, and ‘Shri Ram Global Pre-School’ which are unique from the plaintiffs, which are ‘The Shri Ram School’ and ‘Shri Ram Millennium School’, in terms of different suffixes and logos. The defendants, therefore, argued that there was an authorized use of the TM by the defendants, and the plaintiffs could not have monopoly rights over the TM ‘Shri Ram’. The defendants also further contended that the name/mark was not deceptively similar or confusing as it could be identified because of different logos and suffixes.

The Elements of Passing-off

To succeed in a suit on passing-off, four main requirements should be satisfied by a party who intends to seek the relief of injunction:

1. Prior use
2. Claimant of the right must be the owner of the TM
3. Confusion and deception
4. Delay, if any.

Regarding the first and the second requirements, the defendant already approved the prior use by the plaintiffs, but denied the exclusive right over the mark/name. The defendant informed the court that no such written document existed that stated that the plaintiffs had an exclusive right. However, the plaintiffs had a reputation and no other family member, though involved in contribution to education, had acquired such goodwill, because of the establishment of Mawana School initiated by the Shri Ram family relatives before the use by the plaintiffs was limited to the place, as pointed out by the plaintiffs and, thus, considered by the court.

Regarding the third requirement, it was held that the defendant adopted the TM even though the plaintiffs had been using it for about two-and-a-half decades, thus, creating confusion by starting school with the name/mark ‘Shri Ram’ in the same locality as that of the plaintiffs. Therefore, the name/surname, being unique, is protected as per law.

The delay of about three years in approaching the court was because the plaintiffs, though they were aware about the use of ‘Shri Ram’ by the defendant, did not take any action against them. Thus, there was a procrastination for a significant period of time, leading to the applicability of principle of acquiescence. The reason given by the plaintiffs was of proximity of relation between the founding members of the plaintiff and defendant as they were real brothers, and the plaintiffs tried to caution and resolve the matter amicably.

The Court Observation & Judgment

The court observed that the parties had ‘Shri Ram’ in common and the same was an essential part of their services. It was held in Himalaya Drug Company v/s M/s SBL Ltd., that if the essential features of the TM are same, then the logos are deceptively similar. The TM ‘Shri Ram’ was also used by the defendant like the plaintiff and, therefore, it was also deceptively similar.

The court ordered that the defendant would be allowed to use the mark ‘Shri Ram’ temporarily, but within six months they had to use the disclaimer in their signboard and all stationery material that they had no connection with the plaintiff’s school. They were also restrained from using the TM ‘Shri Ram’ in relation to schools which were under construction. Further, they were directed to give bona fide description that the school was run by Vivan Bharat Ram under the legacy of his grandfather, Shri Ram.

CONCLUSION 

In case of infringement of a registered TM, the owner of the TM can not only prevent the unauthorized use of his TM by the remedy of injunction against the other user, but also can enforce the right to oppose the registration of his TM by the other user under the TM law. But the owner of a TM is not entitled to claim the benefit of these remedies if he deliberately fails to take action against the unauthorized use of his TM by the other user and by his inaction encourages the other user to invest in widely publicizing his TM and expand his business over a period of time. Such an inaction by the owner of a TM despite being aware of the use of his TM by the other person over a period of time implies ‘acquiescence’, i.e., implied consent of the owner of the TM in the use of his TM by the other user.

On the other hand, it is also an established rule of law that the other user of the TM can take the benefit of the defense of ‘acquiescence’ against the owner of the TM only if he establishes that he had used the TM in good faith and in total ignorance of the title of the owner.

It has been observed that before the enactment of the Trade Marks Act, 1999, the judicial opinion in India had firmly decreed that for the defense of ‘acquiescence’ against the owner of the TM, the other user must establish all the four conditions as under:

1. ignorance of the other user about the owner’s right to title to the TM
2. knowledge of the owner of the TM that the other user is using his TM
3. no objection from the owner of the TM despite being aware of unauthorized use of his TM by the other user, and
4. the other user used it over a period of time.

All the aforesaid pre-requisites are statutorily established under sec. 33 of the Trade Marks Act, 1999, which is currently applicable in India. It is also resolved that although under the TM law there can be only single mark, single source and single owner of a TM, yet the ‘acquiescence’ of the owner of a TM in the use of his TM by the other user confers a legal right upon the other user to use not only TM simultaneously with the owner of the TM, but also to apply for the registration of the TM in his name under the TM law in India.

BIBLIOGRAPHY & REFERENCES

[1] Dr. Meenu Paul, “Acquiescence” of Proprietor of a Trade Mark in the Use of His Trade Mark by the Other: “Meaning” and “Consequence” Under the Trade Marks Law in India, NALSAR Law Review, Vol.3, No.1, 2006-07, https://www.nalsar.ac.in/pdf/Journals/Nalsar%20Law%20Review-Vol.%203.pdf.

[2] The Trade Marks Act, 1940, http://www.wipo.int/edocs/lexdocs/laws/en/in/in128en.pdf.

[3] The Trade and Merchandise Marks Act, 1958, http://www.wipo.int/edocs/lexdocs/laws/en/in/in005en.pdf.

1. Devina Choubal, Denial of Injunction on the Grounds of Acquiescence and Delay by Plaintiffs: SRF Foundation v. Ram Education Society, (Aug. 20, 2015, 1:38 PM), https://iiprd.wordpress.com/tag/delay-and-acquiescence/.

2. Swati Bhanot, Court Rules on Passing Off: Denies Injunction Due to “Delay” and “Acquiescence”, (Sept. 18, 2015), https://www.candcip.com/single-post/2015/09/18/INDIA-Court-Rules-on-Passing-Off-Denies-Injunction-Due-to-%E2%80%9CDelay%E2%80%9D-and-%E2%80%9CAcquiescence%E2%80%9D.

3. Shamnad Basheer, Indian Supreme Court on an “IP” Roll: “Scotch” Whisky Denied Protection While Music “Compulsory Licensing” Scope Expanded, (May 28, 2008), https://spicyip.com/2008/05/indian-supreme-court-on-ip-roll-scotch.html.

4. Durga Bhatt, The Law on Acquiescence: Wake Up Before It’s Too Late! (Sept. 18, 2014), http://www.selvamandselvam.in/blog/the-law-on-acquiescence-wake-up-before-its-too-late/.

5. Meenu Paul, “Acquiescence” of Proprietor of a Trade Mark in the Use of His Trade Mark by the Other: “Meaning” and “Consequence” Under the Trade Marks Law in India, NALSAR Law Review, Vol.3, No.1, 2006-07, https://www.nalsar.ac.in/pdf/Journals/Nalsar%20Law%20Review-Vol.%203.pdf.

6. Intellectual Property & Information Technology Laws News Bulletin, Vol.III, Issue 2, (Oct. 2010), http://www.manupatrafast.in/NewsletterArchives/listing/IP%20IT%20Vaish/2010/October-2010.pdf.

7. Gunjan Paharia & Komal Kaul, Indian Courts on Trademark Infringement: An Overview, (June. 15, 2015), INTA Bulletin, Vol. 70, No.11, http://www.inta.org/INTABulletin/Pages/IndianCourtsonTrademarkInfringement_7011.aspx.

8. Vijay Pal Dalmia, Guide to De-Mystifying Law of Trade Mark Litigation in India, (Sept. 29, 2010), http://www.mondaq.com/india/x/111142/Trademark/Guide+to+DeMystifying+Law+of+Trade+Mark+Litigation+in+India.