The focus in the present post is on Section 124 of the Trade Marks Act, 1999. The provision deals with the situation where, when a civil suit for infringement, not just passing off simpliciter, is pending, how and when can a rectification proceedings take place. The law is unambiguous but still takes many man-hours inside and outside courtroom due to purposeful interpretations and flawed logic by some.
The provision is reproduced herein:
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.
The provision, broadly envisages following key question: Where, in a suit for infringement action, a party raises a plea of invalidity of opposite party’s trade mark, can the party file, if not already filed, a rectification petition without leave of the Court? Or where a rectification petition is already pending on the date when the question of invalidity is raised, can the suit be stayed to await the decision on the rectification petition?
Now to see briefly some rulings on this propositions.
As far back as in November 1972, His Honour Avadh Behari Rohatgi in Kedar Nath vs Monga Perfumery & Flour Mills was dealing with Section 111 of the erstwhile 1958 Act which is corresponding to Section 124 of the present Act. His Honour, in paragraph 19 of the judgement dealt with the provision as follows:
19. Mr. D. D. Sharma, the learned counsel for the defendant, submits that the suit is liable to be stayed under Section 111 and he emphasises the use of the word ‘shall’ in the section and submits that it is obligatory for the Court to stay the proceeding under Section 111. I do not agree with this contention because the scheme of the section shows that before the Court stays a -Proceeding in the infringement action, proceeding for rectification of the register under Section 111 must be pending on that date. The defendant cannot file an application subsequent to the institution of the suit under Section 111 and claim that the plaintiff’s suit for infringement must be stayed. If no proceeding for rectification of the register is pending on the date of the institution of the suit by the plaintiff then Section 111 is attracted and a Court may adjourn the case for a period of three months in order to enable the defendant to apply to the High Court for rectification of the register. In that case the Court must be satisfied that the contention as to validity of the defendant’s registration is bona fide and prima facie sustainable. In the present case I am not satisfied that the contention as to validity raised by the defendant is bona fide or prima facie sustainable. No material has been placed on the record to Prove a prima facie case that the plaintiff’s registration is invalid or that the defendant has been carrying on business since 1952 as alleged by him, The defendant obtained his sales tax registration number in 1965. He has not placed any material on the record to show what were his sales during the period from 1952 to 1965. No case at all has been made out to show that the defendant has any prima facie and sustainable case for the cancellation of the plaintiff’s registered trademark. Stay of action may be refused if particulars of concurrent user or prior user are not furnished. (emphasis added)
Meaning thereby, His Honour held that the prima facie tenability of the invalidity is sine qua non of any action for rectification of a trademark under the provision.
Similarly, in Pfizer Products Inc. vs Rajesh Chopra And Ors., Delhi High Court rejected the contention of the Defendant for staying the suit since he had preferred a rectification petition against the trade marks GEODON and ZOLOFT of the Plaintiff. Per Her Honour Gita Mittal, the application for stay and the rectification were not maintainable since the Defendant had not obtained the prior permission from the Court.
In Pernod Ricard S.A.France vs Rhizome Distilleries, Her Honour Khetrapal, following S. 124(5), granted interim injunction to the Plaintiff despite pendency of the rectification proceedings before the IPAB. His Honour Justice Murlidhar in Arun Colour Chem & Ors vs Mithumal Essance Mart also adjourned the suit sine die to await the decision of the rectification proceedings even though the suit was at the stage of final arguments.
In BDA Private Limited vs Paul P. John, His Honour B. D. Ahmed adjourned the suit for three months to enable the Plaintiff to move for rectification after His Honour was satisfied about the prima facie tenability of Plaintiff’s questioning of validity of Defendant’s trade mark.
Very recently in Double Coin Holdings Ltd. vs Trans Tyres (India) His Honour V. K. Jain followed the provision and stayed the suit since rectification proceedings were already pending. Vide s. 124(5) His Honour Jain decided the interlocutory application and thereafter stayed the suit till the time the proceeding for rectification before the IPAB are culminated.
In Apex Laboratories Pvt. Ltd vs Apex Formulations Madras High Court was dealing with the old Act (1958) and in compliance of the Section 111 (b) (ii) (corresponding to the present 124(b)(ii)), His Honour framed the issue about the invalidity and adjourned the suit for three months to enable the Defendant to move for rectification of Plaintiff’s mark.
In Putzmeister Aktingesellchaft vs Aquarius Engineers, Calcutta High Court adjourned the matter sine die since the proceedings for rectification were already pending.
Punjab and Haryana High Court in Parveen Kumar vs Kuldeep Chand Jain followed the provision as well.
That the provision is applicable only in an infringement proceedings is unambiguous. Bombay High Court in Shakti Traders vs Shakti Press quashed the order of staying the proceedings under the provision since the suit in question was for passing off and not infringement.
The rule of thumb for this provision is the judgement by His Honour Anil Kumar of Delhi High Court in Astrazeneca Uk Ltd. And Anr. vs Orchid Chemicals. The judgement leaves no ambiguity whatsoever about the application and the procedure for Section 124. In the instant case, the Plaintiff had moved an application for rectification for Defendant’s trademark. The Defendant took the objection that the rectification petition was not maintainable since the Plaintiff had not obtained prior permission of the Court before approaching IPAB for rectification. Following are few extracts from the ruling:
29. The said provision envisages two eventualities in case the defendant has raised a defense under Section 30 of the Act and the plaintiff has pleaded invalidity of the registration of the defendant’s trade mark, one where the application seeking rectification is already pending and the other where the application is to be filed seeking rectification. In the present case the application for rectification is filed after the institution of the suit which fact has not been denied.
30. Under Section 124(b) if the application for rectification is already pending the suit can be stayed pending final disposal of such proceedings. In case the application for rectification or any such proceeding is not pending, then a party seeking rectification can apply for rectification subject to prima facie satisfaction of the Court regarding invalidity of the registration of the mark of the opposite party. In the present case the plaintiffs, however, have sought rectification of the trade mark of the defendant by filing an application first to the Registrar and thereafter to the Appellate Board without seeking prima facie satisfaction of this Court.
31. On plain reading of this provision, it is apparent that the plaintiffs could not file the application for rectification without showing and obtaining prima facie satisfaction of the Court about their plea of the invalidity of the registration of the mark of the Defendant. Section 124 of the Trade Marks Act, 1999 is similar to the Section 111 of the Trade and Merchandise Marks Act,1958….
32. The Learned counsel for the plaintiffs has tried to distinguish these cases. According to him on the date of filing of the present suit, no application seeking invalidity of the registration of the defendant’s trade mark was pending as the trade mark of the defendant has been registered during the pendency of the suit and the certificate of registration was issued after filing of the suit and therefore, the application for rectification could not be filed prior to the institution of the suit. The plea of the plaintiffs therefore, is that their application for rectification filed before the Appellate Board is maintainable without prima facie satisfaction of the tenability of their plea by the Court. If the application for rectification of the defendant’s trade mark is maintainable without prima facie satisfaction of this Court, then this suit is also liable to be stayed as claimed by the plaintiffs under Section 124(b) of the Act, though under Section of 124(5) of the Act, the application for injunction and for vacation or modification of an ex parte order can be considered and decided by this Court. The distinction between Section 124(b)(i) and 124(b)(ii) is on the basis of pendency of the proceedings for rectification of the register and not on the basis of whether the party initiating the proceedings for rectification could initiate such proceedings before the institution of the suit or not. There can be other eventualities under which a party may not be able to initiate the proceedings for rectification before the institution of the suit, but that will not give them a right to circumvent the prima facie satisfaction of his plea for invalidity, by the Court. The distinguishing feature of the two sub clauses is only pendency of the proceedings and nothing more can be read into them. The plea of substantial compliance of the requirement of Section 124 by the plaintiffs is also not sustainable. Either there is compliance of the said provision or non compliance in the facts and circumstances. Compliance will be when after the institution of the suit, if an application for rectification is to be filed, prima facie invalidity of the opposing mark is to be demonstrated to the Court. The fact that the application could not be filed prior to the institution of the suit, will not entitle a party to circumvent the prima facie satisfaction of the Court. Consequently the proceedings for rectification of the defendant’s mark could not be initiated by the plaintiffs without the prima facie satisfaction of their plea by this Court nor this case is liable to be adjourned or stayed for three months in terms of Section 124(b)(i) of the Act to await the outcome of the rectification proceedings initiated by the plaintiffs before the Appellate Board. (emphasis added)
The ruling and the consequences are as clear as they can be. It is strange to find some judgements and even expensive commentary books not giving any importance to the said ruling by His Honour Anil Kumar.
It is author’s understanding that the compliance of s.124 is sine qua non to argue a case for staying an infringement suit in light of the pending or proposed rectification action. However, as seen from various pronouncements, merely filing a rectification petition does not ipso facto guarantee that the action for infringement shall be stayed till the rectification proceedings have attained a finality.
However, due the view taken by Their Honours of Division Bench of Madras High Court in B. Mohamed Yousuff vs M/S.Prabha Singh Jaswant Singh, IPAB has recently made the provision more ambiguous than ever. After going through plethora of rulings on the provision, IPAB in Jeet Biri Manufacturing v Pravin Kumar Singhal, reported at 2011 (47) PTC 231 (IPAB) has relied on the said ruling of the Madras High Court. The relevant portion of Madras DB judgment are as follows:
(N) In our considered view, Section 124 (1)(b)(ii) of the Act is only an enabling provision. Sub clause (i) and sub clause (ii) of Clause (b) of sub section (1) of Section 124 operates at two different levels for two different situations. While sub clause (i) deals with a situation where any proceeding for rectification is already pending, sub clause (ii) deals with a situation where any proceeding for rectification is not pending. Both the sub clauses focus their field of operation only in relation to the stay of the civil suit. The conditions laid down in sub clause (ii) are intended to enable a party to obtain stay of the suit and not intended to provide for a discretion for the Court to permit or not to permit any application for rectification. Such a position is made clear by sub sections (2) to (5) of Section 124, which deals with the consequences of filing and not filing an application for rectification and of the ultimate outcome of such application for rectification. In other words, the requirements of raising an issue, adjourning the case and a prima facie satisfaction spelt out in Section 124 (1)(b)(ii) should be read as the requirements for the grant of a stay of the suit and not as a requirement or pre-condition for filing an application for rectification. The plain reading of Section 124(1)(b)(ii) shows that it does not mandate a party to obtain the leave of the Court or an order of the Court, for filing an application for rectification. The right to file an application for rectification is a statutory right conferred upon a party who is aggrieved by an entry made in the Register. The said statutory right cannot be curtailed except by the very provisions of the statute. The said right is circumscribed by certain requirements such as the contravention of the provisions of the Act or failure to observe a condition entered on the Register etc., as spelt out under sub sections (1) and (2) of Section 57 of the Act. In respect of the Forum in which such an application for rectification could be filed, there is a restriction under Section 125, in that such an application could be filed only before the Appellate Board if a suit for infringement was already pending. Apart from these restrictions, we do not see any other restriction with regard to the filing of an application for rectification. To interpret Section 124 (1)(b)(ii) to mean that an order should be obtained from the civil Court for filing an application for rectification, regarding prima facie satisfaction, would amount to imposing one more restriction upon the right of a person to seek rectification of the Register. We do not find any such restriction or requirement of the leave/permission of the court, under section 124 (1) (b) (ii). Therefore, with great respect to the learned Judges who were parties to the decisions of the Gujarat and Delhi High Courts, relied upon by the Delhi Party, we are of the considered view that the Tindivanam Party was right in filing an application for rectification, without obtaining the leave of this Court or without getting an issue framed and prima facie satisfaction recorded, in C.S.No.726 of 2004.
Following the said ruling, IPAB has held that since there are conflicting rulings by various High Courts, the IPAB shall follow Madras DB ruling. That is not the sole point, IPAB further held that Section 124 does not provide for the situation where the permission for filing the rectification is refused by the Court. According to the IPAB, s. 124 does not provide for an aggrieved person to move an application under section 57 for cancellation of a trade mark.
After giving academic perspective on superintendence of various High Courts over the IPAB, including Circuit Benches, IPAB concluded that the permission of Court is not required to move for cancellation petition in a pending suit for infringement because of the following reasoning: –
1. Ordinary reading of s. 124 does not specify that leave should be obtained;
2. Language of s. 124 is clear;
3. The word ‘enable’ in s. 124 does not grant a new right to a party which he anyway has in section 57;
4. Section 57 does not say that the powers under that provision are subject to s. 124;
5. S. 124 does not have a non-obstante clause to override;
6. Granting leave by Court includes refusing leave as well and Court only can decide that issue; and
7. The verdict of IPAB should be uniform to apply for all Benches.
Now, IPAB has dealt with the matter at length, there is no doubt about that. However, what IPAB has failed to consider is that S. 124 has to be read along with S. 125 which is reproduced herein:
125. Application for rectification of register to be made to Appellate Board in certain cases.—
(1) Where in a suit for infringement of a registered trade mark the validity of the registration of the plaintiff’s trade mark is questioned by the defendant or where in any such suit the defendant raises a defence under clause (e) of sub-section (2) of section 30 and the plaintiff questions the validity of the registration of the defendant’s trade mark, the issue as to the validity of the registration of the trade mark concerned shall be determined only on an application for the rectification of the register and, notwithstanding anything contained in section 47 or section 57, such application shall be made to the Appellate Board and not to the Registrar.
(2) Subject to the provisions of sub-section (1), where an application for rectification of the register is made to the Registrar under section 47 or section 57, the Registrar may, if he thinks fit, refer the application at any stage of the proceedings to the Appellate Board.
The alleged conflict between s. 57 and s. 124 is clearly answered in s. 125 (2). It is imperative that the statutes are given their fullest meaning without tampering with the provision.
Moreover, what IPAB, and many others, also fail to consider is that when the court is examining the tenability of a plea under s. 124, the views expressed are solely on prima facie material and arguments. At no point is the Court superseding jurisdiction of the IPAB. Furthermore, if the Court is refusing leave finding no prima facie case in the questioning of the validity of the mark, it further implies following two eventualities: –
One, if a person is not able to prove even a prima facie tenability in questioning of a invalidity of a mark, how in the world will he be able to prove himself to be an “aggrieved person” under section 57?
Second, if the Court has refused leave to file for rectification, that party can still challenge the order in a higher forum. How is it different from the thousand appeals we file once the Court of first instance refuses the temporary injunctions, or any other relief, like refusing to allow amendment of pleadings, etc?
What is further shocking is that IPAB had not taken into account that the Supreme Court in Whirlpool Corporation v Registrar Of Trade Marks in 1998 had already decided this matter. Their Honours in Supreme Court were considering the provisions of the 1958 Act. The relevant paragraphs are the following:
The extent of jurisdiction conferred by Section 56 (s. 57 in 1999 Act) on the Registrar to rectify the Register, is, however curtail by Section 107 which provides that an application for rectification shall, in certain situations, be made only to the High Court. These situations are mentioned in Sub-section (1) of Section 107, namely, where in a suit for infringement of the registered Trade Mark, the validity of the registration is questioned by the defendant or the defendant, in that suit, raises the defence contemplated by Section 30(1)(d) in which the acts which do not constitute an infringement, have been specified, and the plaintiff in reply to this defence questions the validity of the defendant’s Trade Mark. In these situations, the validity of the registration of the Trade Mark can be determined only by the High Court and not by the Registrar.
Section 107 thus impels the proceedings to be instituted only in the High Court. The jurisdiction of the Registrar in those cases which are covered by Section 107 is totally excluded. Significantly, Section 107(2) provides that if an application for rectification is made to the registrar under Section 46 or Section 47(4) or Section 56, the Registrar may, if he thinks fit, refer that application, at any stage of the proceeding, to the High Court.
Similarly, under Section 111 (S. 124 of 1999 Act) of the Act, in a pending suit relating to infringement of a Trade Mark, if it is brought to the notice of the Court that any rectification proceedings relating to plaintiff’s or defendant’s trade Mark are pending either before the Registrar or the High Court, the proceedings in the suit shall be stayed pending final decision of the High Court or the Registrar. Even if such proceedings are not pending either before the Registrar or the High Court, the trial court, if prima facie satisfied that the plea regarding invalidity of plaintiff’s or defendant’s Trade Mark is tenable, amy frame an issue and adjourn the case for three months to enable the party concerned to apply to the High Court for rectification of the Register. If within three months, the party concerned does not approach the High Court, the plea regarding invalidity of Trade Mark would be treated as abandoned but if such an application has been given hearing, the suit would be stayed awaiting final decision of the High Court. The finding of the High Court would bind the parties and the issue relating to the invalidity of Trade Mark would be decided in terms of those findings.
What the IPAB further ignored to consider is that the non compliance of s. 124 treats the invalidity issue of a trade mark as abandoned and waived. The point IPAB should have considered is that if a party is deemed to have waived such a critical issue as abandoned before the court trying the suit, how it would be possible for such a person to prove the ingredients to be called as an “aggrieved person” before IPAB which is subordinate to the Court? Reliance on Madras DB ruling has a basic flaw in ignoring that Madras DB did not consider Whirlpool while deciding the matter.
The situation which IPAB has created is summarised as this: Court shall be bound by the final order passed by the IPAB in the rectification proceedings, but, IPAB is not bound by the order and ratio of plethora of judgements making it clear that the permission under Section 124 is sine qua non before moving for rectification. Now there shall be parallel proceedings for the same matter requiring assessment of same evidence by multiple authorities and chances of conflicting judgments are brighter than ever.
Thanks to IPAB, the matter shall now require re-examination by the higher forums so that the earlier orders can be repeated for saving future deliberate interpretations.