This article is written by Om Daga, pursuing a Certificate Course in Trademark Licensing, Prosecution and Litigation from LawSikho.com.

Introduction

Indian economy has grown by leaps and bounds during the last decade contributing to increased commercial activities and consequent rise in the number of commercial disputes at domestic and international level in India. The Government of India realising the immediate necessity initiated legal reforms with a view to address the issue of faster resolution of matters relating to commercial disputes and approved promulgation of an Ordinance which received assent of the President on October 23, 2015. The said Ordinance was subsequently replaced and enacted as the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 on December 31, 2015 but deemed to have been come into effect from October 23, 2015 to deal with such disputes and ensure expeditious disposal of such cases.

Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“the Commercial Courts Act”)

Termed as a seminal legislation and a significant step towards enhancing India’s position in the Ease of Doing Business Index, the Commercial Courts Act mandates setting up of dedicated courts for adjudicating commercial disputes where the specified value of the subject matter is more than INR 1,00,00,000/- by constitution of (i) Commercial Courts at the District Level where High Court does not exercise ordinary original civil jurisdiction; (ii) Commercial Division in High Courts which are already exercising ordinary original civil jurisdiction i.e., the High Courts of Delhi, Bombay, Calcutta, Madras and Himachal Pradesh by the Chief Justice of such High Courts (iii) Commercial Appellate Division in all the High Courts to hear the appeal against orders of Commercial Courts and Commercial Division of High Court. 

The term ‘commercial dispute’ includes within its ambit an expansive and diverse range of disputes arising out of agreement for sale of goods or provision of services, agreement related to immovable property used exclusively in trade or commerce, partnership agreement, intellectual property rights, export or import of merchandise or services, franchising agreements, distribution and licensing agreements, management and consultancy agreements, shareholders agreements, joint venture agreements, etc. 

The Commercial Courts Act has introduced important amendments to the provisions of Code of Civil Procedure, 1908 in their application to any suit in respect of a commercial dispute of a specified value which shall be deemed to have come to force with effect from October 23, 2015 to improve the efficiency and reduce delays in disposal of commercial cases. Some of the key amendments are highlighted hereinbelow:

1. Stringent procedure pertaining to disclosure, discovery, inspection, admission and denial of documents has been introduced with a view to bring forth greater clarity, objectivity and efficiency in the proceedings. 

2. New procedure for conducting “case management hearings” has been introduced to ensure that the process of adjudication is not delayed. The case management hearing would encompass, inter alia, framing of issues, leading of evidence and fixing dates for oral arguments to be advanced by the parties. 

3. A new and separate process for a “Summary Judgment” has been introduced which would allow cases to be summarily adjudicated without recording oral evidence before the issues are framed.

4. Written Statement shall be filed within a period of 30 days and can be extended by the court to a maximum of 120 days from the date of service of the summons, failing which the defendant will forfeit his right to file the same. 

5. Written arguments shall be submitted by a party in support of his case to the Court within four weeks prior to commencing the oral arguments and such written arguments shall form part of the record.

6. Judgment shall be pronounced within ninety days of conclusion of arguments.

Acts constituting passing off and infringement action under the Trademarks Act, 1999

The statutory framework pertaining to trademarks in India is governed by the Trade Marks Act, 1999 and the Trade Mark Rules, 2017 made thereunder. 

Section 2(1)(zb) of the Trade Marks Act, 1999 defines trademark as a mark capable of being represented graphically and distinguishing the goods or services of one person from those of others and may include shape of goods and combination of colours.

A trademark can be any word, symbol, letter, logos, device, mascot, signature, numerals, etc. 

The proprietor of a trademark has two causes of action available against the wrongful use of their marks by other traders: 

1. An action for infringement in the case of a registered trademark, which is a statutory remedy.

2. An action for passing off in the case of an unregistered trademark, which is a common law remedy.

Section 29 of the Trade Marks Act, 1999 deals with Infringement of registered trademarks and provides as under the circumstances under which the registered trademark is infringed:

• When an unregistered proprietor or a licensee uses a mark in the course of trade which is identical with or deceptively similar to the registered trademark in relation to the goods or services in respect of which the trademark is registered such as to portray the use of mark to be taken as being used as the trademark. 

• When an unregistered proprietor or a licensee uses a mark in the course of trade which because of –

1. its identity with the registered trademark and the similarity of the goods or services covered by such registered trademark; or

2. its similarity to the registered trademark and the identity or similarity of the goods or services covered by such registered trademark; or

3. its identity with the registered trademark and the identity of the goods or services covered by such registered trademark;

and that such use is likely to cause confusion on the part of the public or is likely to be taken to have an association with the registered trademark.   

• When an unregistered proprietor or a licensee uses a mark in the course of trade which is identical with or similar to the registered trademark, but on goods or services which are not similar, provided the registered trademark has reputation in India and the use of the mark without due cause would take unfair advantage of or is detrimental to the distinctive character or repute of the registered trademark.

• When a person having no claim on a registered trademark uses such a registered mark as his trade name or part of his trade name or name of his business concern or part of it while dealing in goods or services in respect of which the trademark is registered.

• Where a person having no claim on a registered trademark applies such registered mark to a material intended to be used for labelling or packaging goods, as a business paper, or for advertisement of goods or services knowing that application of such mark was not authorised by the proprietor or licensee. 

• The advertising of a registered trademark to take unfair advantage of, or against the honest commercial practices or which is detrimental to the distinctive character or which is against the reputation of the trademark.

“Passing-off” is a tort actionable under common law which can be used to enforce unregistered trademarks. The Trademarks Act, 1999 under section 27 recognizes the common law rights of the trademark owner to take action against any person for passing off his goods as the goods of another person or as services provided by another person or the remedies in respect thereof. The term “Passing Off” has not been defined in the Trademarks Act, 1999.

The three fundamental elements of passing off action are:

(a) The establishment of reputation or goodwill attached to the goods or services; 

(b) Possibility of deception; and 

(c) Suffering or likelihood of suffering of irreplaceable harm in terms of reputation or money.

Trade Marks Infringement and Passing Off under the Commercial Courts Act

“Commercial Disputes” brings within its ambit matters relating to “Intellectual Property Rights” and thus any dispute relating to infringement and passing off of Trade Mark shall now be tried before the “Commercial Courts” under the Commercial Courts Act. The new legislation is a turning point in the hitherto journey of the IP litigation and has made certain deviations in the way Code of Civil Procedure, 1908 is applied with respect to these suits of a specified value. 

A few notable trademark infringement and passing off cases decided under the Commercial Courts Act is as under:

In the case of Skechers USA Inc & Ors v. Pure Play Sports & Ors[1], the Plaintiff along with its affiliated entities, had filed a suit against the defendants for a permanent injunction restraining the defendants from infringing the trade dress of the plaintiffs’ shoes and thereby passing off their shoes as that of the plaintiffs’ and for ancillary reliefs of recovery of damages, rendition of accounts, delivery etc.  On 25th May, 2016, the Hon’ble Delhi High Court granted an interim injunction restraining the defendants and appointed a local commissioner to visit the premises of the defendants to seize the offending goods. As the defendants failed to appear and/or file written statements in their defence, within the prescribed period under the recently introduced Commercial Courts Act, the right of all the defendants to file their written statements was declared to have been closed, and the Hon’ble Delhi High Court proceeded ex-parte against the Defendants, except Defendant no. 1 who entered appearance before the Court but did not offer any defence. The Hon’ble Delhi High Court, considering the totality of the facts and circumstances of this case, passed a summary judgment for disposal of the suit in favour of Plaintiffs, despite there being no application filed by it for the same and granted a decree for permanent injunction against all the defendants jointly and severally and imposed costs of the suit on Defendant No. 1 to curb dilatory tactics and opined that it had the power to pass a decree in a suit summarily, even in the absence of a specific application requesting the same, as it is satisfied that nothing would come out of putting a party through the rigmarole of a trial. 

In the case of Flipkart Internet Private Limited v. www.flipkartwinners.com & Ors[2], the Hon’ble Delhi High Court opined that the defendants have no real prospect of defending the claim, as they have neither entered appearance nor filed their written statement and granted a decree for permanent injunction in favour of plaintiff restraining the defendants from using the mark “Flipkart” or any other deceptive variant which is identical and/or similar to the plaintiff’s trademark “Flipkart” in respect of domain name, lucky draw contest or any other manner thereby amounting to infringement of plaintiff’s trademark and also ordered cost in favour of the plaintiff.

In the case of Max Healthcare Institute Ltd. v. Sahrudya Health Care Pvt. Ltd.[3], the Hon’ble Delhi High Court observed that there is no iota of doubt that the two marks are similar/deceptively similar and are likely to cause confusion to the public at large. The Court further noted that MAX is not an abbreviation in the English language of the word ‘maximum’ and also the word MAX is not a generic or laudatory word in relation to hospital and healthcare services and it is not the jurisdiction of this Court to hold the registration to have been wrongly granted. The Court, therefore, passed a permanent injunction against the Defendant from using the trademark MAXCURE HOSPITALS, MAXKURE, MAXCURE MIDICITI or any other similar mark of the plaintiff and instructed the Defendant to change the name of its hospitals /healthcare services within 30 days of the order.

Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018 (“Commercial Courts Amendment Act”)

The introduction of this reform measure has helped India jump 42 places to 100 positions among 190 nations on the World Bank’s “Doing Business” 2018 Report. The Central Government considering the growing Foreign Direct Investment and overseas commercial transaction which have contributed to significant increase in commercial disputes, on May 03, 2018, promulgated an Ordinance amending the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 to expand the scope of commercial courts in India and further improve India’s ranking in the ‘Doing Business Report’, which inter alia, considers dispute resolution environment in a country as one of the parameters for doing business. 

The Ordinance was subsequently replaced and enacted as the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018 (“Commercial Court Amendment Act”) on August 20, 2018 (deemed to have been come into effect from May 03, 2018) to bring about some key changes:

• The specified value of commercial disputes has been reduced to Rs. 3,00,000/- from Rs. 1,00,00,000/- 

• The Commercial Courts shall be established at the level of District Judge even in jurisdictions where the High Court exercises ordinary original civil jurisdiction. 

• The split of commercial courts into:

1. Commercial Courts at the level of a District Judge; and

2. Commercial Courts below the level of a District Judge;

in jurisdictions where the High Court does not exercise ordinary original civil jurisdiction.

• The Commercial Appellate Courts shall be established in jurisdictions where the High Court does not exercise ordinary original civil jurisdiction. Appeals from Commercial Courts below the level of District Judge shall lie before the Commercial Appellate Court. 

• The introduction of compulsory “pre-institution mediation” prior to filing a suit, in accordance with the Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018 through the State Legal Services Authorities and the District Legal Services Authorities, unless the suit contemplates any urgent interim relief.

Impact of the Commercial Courts Amendment Act 

The significant impact of the Commercial Courts Amendment Act is as under:

The reduction in “specified value” from INR 1,00,00,000/- to INR 3,00,000/- has widened the pecuniary jurisdiction of Commercial Courts exponentially enabling the parties to approach the Commercial Courts at the level of District Judge in jurisdictions where High Court exercises ordinary original civil jurisdiction and Commercial Courts below the level of District Judge in jurisdictions where High Court does not exercise ordinary original civil jurisdiction, as the case may be.

The introduction of “pre-institution mediation” process will provide an opportunity to the parties to amicably settle the dispute outside the ambit of courts without spending years in litigation thereby ensuring cost-effectiveness besides peace of mind. The decree passed, in terms of settlement arrived at before the Delhi High Court Mediation and Conciliation Centre, by the Hon’ble Delhi High Court recently in the case of GrabOn v. GrabOnRent[4] is a case in point wherein the plaintiff had filed a trademark infringement suit against the defendant alleging misuse of the plaintiff’s goodwill and causing confusion among the consumers by use of deceptively similar brand name resulting in negative customer reviews, complaints and feedbacks which was adversely affecting the business, reputation and recognition of the plaintiff. The Hon’ble Delhi High Court passed a decree in terms of settlement arrived at before the Delhi High Court Mediation and Conciliation Centre wherein it was agreed that GrabOnRent shall refrain itself and its vendors, distributors, sellers, etc. to sell, advertise or deal in goods or services under the mark ‘GrabOnRent’, ‘GrabOn’ or similar trademark and domain name within the agreed timeframe, including payment of damages to “GrabOn” and shall place a disclaimer that they have no relation with GrabOn on each and every page of their website and Mobile App and shall destroy all the articles/goods bearing the mark “GrabonRent” or any other mark deceptively similar to “GrabOn” by 31st July 2020.

Conclusion 

The Commercial Courts Act and subsequent amendment thereto have resulted in positive change in commercial dispute resolution process and improved the way the matters relating to Intellectual Property Rights are adjudicated and helped India to make a substantial leap upward, in raising its World Bank’s ease of doing business ranking.

References

1. http://delhihighcourt.nic.in/writereaddata/orderSan_Pdf/rse/2018/103915_2018.pdf

2. https://indiankanoon.org/doc/82029942/ 

3. https://indiankanoon.org/doc/47648057/ 

4.http://www.legaleraonline.com/le_mag_pdf/Legal_Era_Magazine_October_2019.pdf  (See: Page no. 15)

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