This article is written by Shreya Jad. This article exhaustively covers Section 124 of the Trade marks Act, 1999, which allows a stay on the ongoing proceedings in a suit for infringement of a trade mark in case the validity of a registered trade mark is brought into question. The article also covers the nuances of the defence taken by either party and the correlation of Section 124 with other relevant provisions of the Trade marks Act, 1999, which deal with the invalid registration of a trade mark. For better understanding, relevant case laws have also been discussed.

Introduction

The primary objective of a trade mark is to act as an identifier of a brand/business. This may be done using words, designs, symbols, phrases, packaging, etc., or a combination of all of them. 

Section 2(1)(zb) of the Trade marks Act, 1999 (hereinafter referred to as the Trade marks Act) defines a trade mark as a graphically represented mark, which is used to identify the goods or services provided by a specific person, and/or is capable of distinguishing the goods and services provided by one person from others. Such a mark is graphically represented using different colours, shapes, symbols, packaging, or a combination thereof. 

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The essential conditions for identifying and using a trade mark are as follows:

  • The mark can be reproduced on paper, that is, it can be represented graphically.
  • The mark is distinguishable.
  • The mark creates a connection between the goods/services it is representing and the audience viewing the mark.

The sub-classification of trade marks has also widened the scope of protection offered to different products. Service marks, for instance, represent the services being offered by a company and cannot be used or replicated by any other existing company (ex: FedEx). In addition to this, word marks protect the textual representation of the trade mark, offering a wide range of protection (ex: iPhone). Device marks protect the visual and artistic  representation of a trade mark, using colours, fonts, and drawings, and also include the packaging of a product (ex: the packaging of Orion’s Choco Pie). 

A trade mark is generally protected from infringement by others through its continuous use and registration. Most trade mark laws across different jurisdictions combine both forms of protection, but complete legal protection of a trade mark is only guaranteed by way of its registration. In India, the process of registration of a trade mark follows the timeline and process laid down in Section 18 (application for registration), Section 19 (withdrawal of application), Section 20 (advertisement of application), Section 21 (opposition to registration), Section 22 (correction and amendment), and Section 23 (registration) of the Trade marks Act. Once a trade mark has been registered in the Trade marks Register, the registration remains valid for a period of ten years from the date of registration, after which the proprietor shall have to renew the registration of the trade mark.  

Infringement of a trade mark

Trade marks are susceptible to being exploited, copied, and used without authorisation, by various persons. Those who attempt to do so generally bank upon the goodwill and reputation of an established trade mark to mislead consumers into believing their products/services are being sponsored by the companies represented by those trade marks. 

The infringement of trade marks is covered by Section 29 of the Trade marks Act, which specifies that a registered trade mark is infringed when:

  1. An unauthorised person adopts a trade mark identical or deceptively similar to an already registered trade mark for the use of the same goods and services as the original trade mark. For instance, if a local shoe brand uses the swoosh sign of the brand Nike in its products to mislead people into believing it was selling Nike’s shoes.
  2. An authorised person adopts a mark identical or deceptively similar to a registered trade mark and uses it for promoting goods/services different from those related to an already registered trade mark to leverage that brand’s reputation to enhance its own image. For instance, if a local deodorant brand begins using the trade mark “Starbucks” to market its products.
  3. Unauthorised use of a registered trade mark as a trade name.

The remedies for infringement of a trade mark under the Trade marks Act are available only for a registered trade mark. For unregistered trade marks, the tortious remedy against passing off is applicable. The Trade marks Act provides for both civil and criminal remedies in case of infringement of a trade mark, depending upon the gravity of the offence. 

The criminal remedies for an act of fraudulent use of a trade mark are provided under Sections 103 and 104 of the Trade marks Act, which make the offence of falsifying a trade mark or possessing an instrument for the purpose of falsifying a trade mark, or selling or hiring any such good to which a false trade mark has been applied, punishable with imprisonment for a term of at least six months, which is extendable to three years, along with a minimum fine of fifty thousand rupees, which can extend to two lakh rupees. 

The civil remedies for infringement of a registered trade mark are provided in Section 134 of the Trade marks Act, which states that a claim against infringement of a trade mark shall be filed before the District Court, which holds the appropriate jurisdiction to hear the case, and Section 135 of the Trade marks Act, which specifies the civil remedies available to a claimant in a suit for infringement of trade marks, namely, injunction, damages, account of profits, seizure/destruction of infringing material.

Stay of proceedings

While Section 134 of the Trade marks Act provides the remedy of filing a suit of infringement against any unauthorised use of a trade mark, Section 124 of the Trade marks Act provides for the stay of such proceedings when the validity of the trade mark’s registration is questioned. It allows either party in the suit to raise a defence against the claim of infringement, citing invalid registration of a trade mark. The defendant may raise this defence in response to the plaintiff’s claim in a suit for infringement of trade mark, and the plaintiff may raise this in an infringement suit where the defendant relies on Section 30(2)(e) (limits on effects of registered trade mark) of the Trade marks Act to justify the use of the infringed trade mark. If the validity of the registration of either party’s trade mark is challenged, the court is required to satisfy itself of the prima facie existence of such a dispute and frame an issue in that regard, while staying the infringement suit to decide the validity of the registration of such trade mark. 

Clause-wise explanation of Section 124 of Trade Marks Act, 1999

Section 124(1) of Trade Marks Act, 1999

Clause 1 of Section 124 identifies the cases wherein the defence under Section 124 of the Trade marks Act can be relied upon by either party in a suit filed before the District Court for infringement of a trade mark:

  • In a suit for infringement of trade mark where the defendant pleads that the registration of the plaintiff’s trade mark is invalid
  • When the defendant relies on Section 30(2)(e) of the Trade marks Act in a suit for infringement, which provides an exception to the defendant if he is also the proprietor of a registered trade mark similar to an existing trade mark. In such a suit, the plaintiff may contend that the identical trade mark registered by the defendant is invalid. 

Sub-clause(i) of clause 1 of Section 124 discusses a scenario where the rectification proceedings against an invalidly registered trade mark have already been initiated and are pending adjudication before the Registrar of Trade marks or the High Court (previously the Intellectual Property Appellate Board or IPAB), as may be applicable. In case no such proceedings have been initiated and the court is satisfied of the tenability of the claim of invalidity of registration of the trade mark, it shall frame an issue in that regard and adjourn the case for three months from the date of framing the issue to allow the party to apply for rectification of the trade marks register, as per sub-clause (ii) of clause 1 of Section 124.  

Section 124(2) of Trade Marks Act, 1999

Clause 2 of Section 124 specifies that if the party has made such an application for rectification of the Register of trade marks, within the time provided by the court, the trial shall be stayed until the rectification proceedings have been disposed of.

Section 124(3) of Trade Marks Act, 1999

Clause 3 of Section 124 states that if no such application for rectification is made even during the time allotted by the court, the claim pertaining to the validity of the trade mark shall be deemed abandoned, and the court shall proceed with the suit and adjudicate upon other issues in the matter.

Section 124(4) of Trade Marks Act, 1999

As per clause 4 of Section 124 of the Trade marks Act, the final order made in the rectification proceedings by the Registrar or the High Court, shall be binding, and the court hearing the suit of infringement, shall also dispose of the suit in accordance with the final order passed in the rectification proceedings, to the extent of the issue of invalidity of a registered trade mark.

Section 124(5) of Trade Marks Act, 1999

However, as per clause 5 of Section 124 of the Trade marks Act, the stay ordered by the court in an infringement suit, as per the aforesaid clauses of Section 124, shall not prevent the court from making an interim order during the period the suit has been stayed to decide upon the validity of the registration of a trade mark. 

Interplay between Sections 47, 57, and 124 of Trade Marks Act, 1999

Section 47 and Section 57 of the Trade marks Act also provide remedies for removal or rectification of a trade mark if the proprietor of the trade mark fails to establish bona fide, regular usage of the registered trade mark or if the trade mark has been registered erroneously. The correlation between the challenge to the validity of a registered trade mark  under Section 47, Section 57, and Section 124 of the Trade marks Act has been the subject matter of much discussion and debate. 

Section 47 of Trade Marks Act, 1999

Section 47 of the Trade marks Act mandates that a trade mark that was registered without any bona fide intention and has not been used by the trade mark proprietor for three months prior to the date of filing of the trade mark registration application will be removed from the Register of Trade marks. Another ground for such removal would be when the proprietor of the trade mark cannot sufficiently prove bona fide use of the trade mark for a continuous period of five years from the date of trade mark registration. However, in certain cases of non-usage, the Tribunal may refuse to remove the trade mark:

  • If under Section 12 (registration in the case of honest, concurrent use, etc.) of the Act, the person has received permission to register a similar trade mark for those very goods and services, or if the Tribunal believes that he can do so.
  • If it can be established that the trade mark was put to use (either for goods and services of the same category of the trade mark or of a category related to the trade mark) by the owner of the trade mark during the concerned period.

As per Section 47(2), if a registered trade mark is not being used in the concerned markets or places, and if another person under Section 12 has received permission to register a similar trade mark for those very goods and services and wishes to use it in those concerned markets or places, they may apply to the Registrar or the High Court (previously, the IPAB), and they can limit the original trade mark’s scope to make way for the new one. 

Additionally, as per Section 47(3), if a registered trade mark is not being used due to special circumstances, such as an embargo for use put forth by an existing law, it shall not be removed from the Register for reason of non-usage of the trade mark.

Section 57 of Trade Marks Act, 1999

Section 57 of the Trade marks Act provides for cancellation/variation of a trade mark that has been erroneously registered or does not fulfil the requirements of a registered trade mark; they can apply to the Registrar or High Court (earlier the IPAB), and the Tribunal can then make an order for rectification/cancellation of the trade mark, as they deem fit. The Tribunal can also decide to do so on, on its own accord, but in such a case, it must ensure to notify the parties regarding the same and provide them with an opportunity to present their case.

An application for rectification or cancellation of a trade mark may be filed on the following grounds:

  1. Registration of a trade mark has been made due to fraud or misrepresentation of facts.
  2. A registered trade mark is similar to an already registered trade mark.
  3. There is an error or defect in the entry made in the register.
  4. An entry of a trade mark made contrary to the provisions of the Trade mark Act.
  5. Non-payment of the renewal fee for registered trade mark

Patel Field Marshal Agencies vs. P M Diesels Ltd. (2017)

The Supreme Court, in its decision in the matter of Patel Field Marshal Agencies vs. P M Diesels Ltd (2017), decided on the interplay between Section 47, Section 57, and Section 124 of the Trade marks Act with respect to the independent proceedings for rectification of a registered trade mark in the Trade marks Register and the question of validity of a registered trade mark arising in a suit of infringement of trade mark. 

The issue framed and discussed in the matter was whether the statutory authority (earlier, the IPAB) established under the Trade marks Act, that is, the Registrar of Trade marks, or the High Court, would be able to provide a remedy for rectification of a trade mark in the event that the issue of validity of the trade mark’s registration has already been raised in an infringement suit before the District Court. 

The conflict between Section 47, Section 57, and Section 124 is the result of the fact that in a proceeding under Section 124 of the Trade marks Act, the District Court is the sole authority that can ascertain the validity of the registered trade mark. If the District Court decides that the trade mark is invalidly registered, relevant proceedings shall be initiated before the statutory authority mentioned in the Trade marks Act (IPAB/High Court, Registrar of Trade marks).

On the other hand, if the claim of invalidity is not pursued within the three-month limitation period provided in Section 124, it shall be deemed abandoned. The Supreme Court was contemplating the issue of whether the effect of a proceeding for removal or rectification of a trade mark under Sections 47 and 57 shall be in conjunction with the proceedings under Section 124 or whether these two proceedings could continue independently of each other, even if they arise from the same cause of action.

It was seen that the High Courts of Delhi and Madras had also taken this question into account in a variety of decisions. In the case of Astrazeneca UK Ltd. vs. Orchid Chemicals and Pharmaceuticals Ltd. (2006), the High Court of Delhi decided that if the District Court determines that the trade mark is validly registered, then the only recourse available to the party relying on this defence, is an appeal against the District Court’s decision. The High Court also held that the aggrieved party shall be prohibited from challenging the validity of the registration of the trade mark for a second time by taking recourse through Section 47 and Section 57 of the Trade marks Act. Therefore, the proceedings under Sections 47 and 57 were deemed contingent upon the outcome of the court’s decision in a prima facie case of invalidity of a trade mark under Section 124. 

Contrary to this approach, the Madras High Court determined in B. Mohamed Yousuff vs. Prabha Singh (2008) that an adverse order by the court, under Section 124, would not preclude the aggrieved party from pursuing the remedies of rectification and removal of trade mark from the Register of Trade marks, under Sections 47 and 57 of the Trade marks Act. 

Its earlier decision in the Astrazeneca case was overruled by the High Court of Delhi in Data Infosys Ltd. vs. Infosys Technologies Ltd. (2016). If rectification proceedings have been filed before the appropriate authorities and the plea of invalidity of trade mark is pending prior to the filing of an infringement suit, the court shall have to adjourn the infringement suit until the final disposal of the order by those authorities. Therefore, these two claims of rectification and trade mark and infringement of trade mark cannot proceed independently.

The Supreme Court’s decision in Patel Field Marshal Agencies vs. P.M. Diesels (2017) contradicted the High Court of Delhi’s decision in Data Infosys Ltd. vs. Infosys Technologies Ltd. (2016). The Supreme Court held that, where the remedy of rectification/removal of a trade mark has been sought by the aggrieved party, the IPAB shall have the sole authority to determine the validity of a trade mark’s registration, and such a decision will be binding on the District Court. 

However, in a case wherein a suit is pending before the District Court for infringement of trade mark, the finding of the IPAB shall be contingent upon the District Court’s decision regarding the validity of the trade mark registration in the infringement suit. The parties shall abandon their plea for rectification if any of them fail to submit an application to the appropriate authority for rectification of the trade mark, following the District Court’s order that the registration of the trade mark is prima facie invalid. 

In the event that the plea for rectification is abandoned by the aggrieved party, the parties would not have the option of pursuing the remedy under Sections 47 and 57 of the Trade marks Act.

Anubhav Jain vs. Satish Kumar Jain and another (2023)

The High Court of Delhi, in its decision in Anubhav Jain vs. Satish Kumar Jain and another (2023), held that the Supreme Court’s decision in Patel Field Marshal Agencies vs. P.M. Diesels (2017) does not take away the aggrieved party’s right to seek rectification of the Trade mark Register under Section 57 of the Trade marks Act. The High Court further observed that since the Supreme Court in the Patel Field Marshal Agencies case did not directly deal with the right under Section 57 of the Trade marks Act. The judgement is not necessarily an authority on Section 57. This Section shall not be deemed to be subject to Section 124 of the Trade marks Act. In view of the same, the aggrieved party shall not require the District Court’s permission before instituting proceedings before the High Court, under Section 57. 

Relevance of Section 124 of Trade Marks Act, 1999

The primary objective of Section 124 of the Trade marks Act is to provide a defence to either party against the claim of infringement of a registered trade mark. Since the abolition of IPAB and the transfer of its jurisdiction and powers to the High Court, several attempts have been made to combine the two proceedings in order to expedite the final decision in a matter wherein the validity of the registration of a trade mark has been challenged. The rationale behind this, as held by various courts, is that since the rectification/ cancellation proceedings of a trade mark shall also be heard before the High Court itself, it would make better sense to club the proceedings in one matter and dispose of both issues in one go. This approach has also been taken in cases where the defendant has relied upon Section 30(2)(e) of the Trade marks Act to justify the use of its own trade mark and impugn the validity of the plaintiff’s trade mark. However, this approach has not always been unconditionally agreed upon by the courts. The same shall be clarified by way of the case laws discussed subsequently.  

Relevant case laws

Sana Herbals Private Limited vs. Mohsin Dehlvi (2022)

In Sana Herbals Private Limited vs. Mohsin Delhvi (2022), a suit for infringement of trade mark was filed by the proprietor of the trade mark “Dehlvi,” and the defence of invalid registration of trade mark was relied upon by the defendant. Consequently, an application was submitted to the High Court of Delhi, in accordance with Section 124 of the Trade marks Act, to initiate proceedings for the cancellation/rectification of the trade mark before the IPAB and to request that the current infringement litigation be suspended.

After the enactment of the Tribunal Reforms Act, 2021, the IPAB was abolished, and the jurisdiction of the IPAB was transferred back to the High Courts under Section 124. Therefore, the court of original jurisdiction under Section 124 would be the High Court of Delhi.  Additionally, Rule 26 of the Delhi High Court Intellectual Property Rights Division Rules, 2022 permits the High Court of Delhi to exercise powers of transfer under Section 24 of the Code of Civil Procedure, 1908 for transfer and consolidation of such matters to itself. This means that the High Court may, at its discretion, transfer and consolidate the infringement suit and rectification/cancellation proceedings of the same trade mark, even if they are pending in separate forums. Thus, the pendency of the infringement suit while the rectification proceedings were being decided was deemed unnecessary.

Amrish Aggarwal Trading vs. Venus Home Appliances Pvt. Ltd. (2024) 

The decision in Sana Herbals vs. Mohsin Dehlvi (2022) was overruled by the decision of the Division Bench of the High Court of Delhi in Amrish Aggarwal Trading vs. Venus Home Appliances (2024). The Division Bench noted in its decision that the view taken in the case of Sana Herbals was contrary to the decisions relied on in matters such as Elofic Industries (India) vs. Steel Bird Industries (1985), Puma Stationer P. Ltd. and Anr vs. Hindustan Pencils Ltd. (2010), and Patel Field Marshal Agencies vs. P.M. Diesels (2017). The High Court placed reliance on cases wherein a rectification petition was filed simultaneously with the written statement challenging the validity of registration of the trade mark in a suit for trade mark infringement before the court could frame any issues regarding the same or order a stay on the proceedings, in line with Section 124 of the Trade marks Act. In its decision in the present case, the court observed that the Trade marks Act dictates that the proceedings in an infringement suit be stayed while a decision on the rectification proceedings is pending. Merely imitating rectification proceedings of a trade mark shall not result in an automatic stay of the proceedings in a suit for infringement. Additionally, the court also observed that simply because the Act does not provide for an automatic stay of proceedings, it does not eliminate the need for the court to issue an order staying further proceedings in the infringement proceedings. Hence, the court overruled the decision in Sana Herbals vs. Mohsin Dehlvi (2022), to that extent. 

Dharampal Satyapal Ltd. vs. Basant Kumar Makhija (2023)

In the matter of Dharampal Satyapal Ltd. vs. Basant Kumar Makhija (2023), the plaintiff had filed a trade mark infringement suit against the defendant, claiming unauthorised use of their registered trade mark. The defendants argued that their use of the trade mark was protected under Section 30(2)(e) since they had a registered trade mark similar to the trade mark that was the subject of the suit of infringement. The fundamental issue before the High Court of Delhi was whether the plaintiff could raise the issue of invalidity of the defendant’s trade mark in their replication to the written statement or whether it would require the amendment of the original plaint filed.

The court held that as per the wording of Section 124(1)(b), the plaintiff could plead invalidity of the defendant’s trade mark registration only when the defendant had already relied upon the defence of Section 30(2)(e). Therefore, an additional issue was framed by the High Court to address the plaintiff’s claim regarding the invalidity of the defendant’s trade mark.

Intercontinental Great Brands LLC vs. Parle Products Pvt. Ltd. (2023) 

In Intercontinental Great Brands LLC vs. Parle Products Pvt. Ltd. (2023), the plaintiff was the owner of the registered trade mark, “OREO,” which was used to describe vanilla cream-filled chocolate sandwich cookies. The plaintiff filed a lawsuit against the defendant, “FABIO,” which was sold by Parle and was also branded as a chocolate sandwich cookie with a chocolate cream filling. Both biscuit brands had a similar structure and even a similar blue and white packaging. It was alleged by the plaintiff that the biscuits being sold as FABIO were identical to the OREO cookies being sold by the plaintiff. The plaintiff further alleged that the pronunciation of the name FABIO was also deceptively similar to the word OREO. The plaintiff filed an infringement suit against FABIO on the above grounds. The court held that the defendant had made a deliberate attempt to make its product deceptively similar to OREO by using the alphabet “O” after the word “FAB,” and a consumer of average intelligence could be easily misled into believing that the two marks were being used by the same manufacturer. Thus, the defendant was restrained from using the mark FABIO and from manufacturing, packaging, or selling chocolate sandwich cookies with vanilla cream. 

In the course of the proceedings in this matter, OREO had attempted to file an application under Section 124(1) of the Trade marks Act, seeking stay on the infringement proceedings for rectification of the defendant’s registered trade mark, “FABIO.” However, this application was set aside by the court, citing that in order to seek such a stay for rectification of the defendant’s trade mark, it is imperative that the defendant rely upon the defence provided in Section 30(2)(e) of the Trade marks Act. The court relied on its decision in Dharampal Satyapal Ltd. vs. Basant Kumar Makhija (2023) to drive the point home that the plaintiff would have to specifically claim that the registration of the defendant’s trade mark was invalid, either in the plaint or in its replication. Furthermore, such a claim should be substantiated by arguable grounds. While the plaintiff had argued that even if they had made no such claim in the plaint or replication, it could make the claim for invalidity of registration of a trade mark in its application under Section 124. The High Court disagreed with this argument and held that while an application under Section 124 may elaborate upon the grounds of invalidity of the registration of the defendant’s trade mark,  the primary plea of invalidity has to be raised in the plaint or in its replication.

The petition was dismissed, as the plaintiff had not challenged the registration of the mark “FABIO” in favour of the defendant or presented any grounds for such a challenge.

Conclusion

The objective of Section 124 of the Trade marks Act is to prevent multiplicity of proceedings when the application for rectification/removal of a trade mark is already pending before the Registrar of Trade marks/High Court. The Supreme Court’s objective in pronouncing its decision in Patel Field Marshal Agencies vs. P.M. Diesels (2017), wherein the remedies under Section 47 and Section 57 are made contingent upon the findings of the Registrar/High Court with respect to the validity of registration of a trade mark, also emerges from the same desire to prevent multiplicity of proceedings. 

However, interlinking and making the rights of an aggrieved person for rectification/cancellation of the trade mark registration, to the extent of ensuring that they are dependent on the court’s prima facie finding, has also raised questions, which is why we see many decisions wherein different High Courts are attempting to break away from the interpretation given by the Supreme Court in the case of Patel Field Marshal Agencies vs. P.M. Diesels (2017).

One of the biggest grey areas left behind in the aftermath of the Supreme Court’s decision is a scenario wherein the court does not frame an issue with respect to the invalidity of the registration of a trade mark or gives no other finding either. This situation would worsen if the High Court does indeed club the petitions for stay of an infringement suit and rectification of trade mark together, since the delay in providing a final finding regarding validity of a trade mark by the court would consequently delay the rectification proceedings, and the objective of expediting the decision-making process would be defeated. Moreover, there are chances that the cause of action for rectification or cancellation of registration of a trade mark arises once the infringement proceedings have been decided, which shall not be brought before the court. For instance, if the registered user fails to use the trade mark for five years from the date of registration of the trade mark. While the legal position on the applicability of the stay granted under Section 124 has been discussed at length in multiple decisions, the nuances of its applicability in the context of rectification and cancellation of trade marks, needs to be further examined by the courts to come to a constructive and definitive interpretation and application of the Section. 

Frequently Asked Questions (FAQs)

Would the stay under Section 124 also be applicable in a suit for passing off?

Section 124 specifically depends on a scenario wherein the validity of the registration of a trade mark is put into doubt. Here, the emphasis lies on “registration.” Since a suit for passing off is filed for unregistered trade marks, the stay under Section 124 would not be applicable. 

Would the stay under Section 124 be applicable in criminal prosecution of a person infringing a trade mark?

No. The proceedings followed in the event of criminal prosecution for infringement of a trade mark are entirely different in nature, involving arrest and imprisonment of the concerned person. A stay would not be applicable in such a situation. 

In which court is a suit for infringement of a trade mark filed?

A suit for infringement of a trade mark may be filed in:

  • District Court
  • Commercial Court (As per the definition given under the Commercial Courts Act, 2015)
  • High Court having ordinary civil jurisdiction

If there are two trade marks registered for similar products, can claims be made against the other registered trade mark?

No. However, if the two trade marks are deceptively confusing, the Court can order an interim injunction or any other interim order even when the stay under Section 124 is operational. 

References 

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