No Rights In A NON-used, Registered, Trademark?

In recent pronouncements, Delhi High Court has come down heavily against companies which, though registered proprietor of, never used the trade marks on their own choice.

Briefly stated, the law of the trade mark is that registered or not, any person can claim priority in a coined/invented trade mark and prevent others from using the same/deceptively similar mark lest people might confuse the source of the goods. The cardinal principle of IP law as, as taught by a former senior and a very seasoned lawyer: There can be only one mark and one source.

Non use of a trade mark, if it is on the Register, gives anyone a statutory right to file a cancellation petition before the Registrar of trade Mark under Section 47 of the trade Marks Act, 1999 to have the mark removed. The period to initiate the petition must be five years and one month prior to initiate the petition.

Now the Courts way up to Supreme Court realise that the use of a mark can be in various ways and there is no limitation for a person to use a mark. However, the Courts should see the evidence of use, even in any form.

Two prominent cases are Virumal Praveen Kumar vs. Needle Industries (India) and Fedders Lloyd Corporation Ltd. & Anr. Vs. Fedders Corporation.

In Needle Industries ruling, the High Court held the following in paragraph 24:

In view of the aforesaid factual position what has to be considered is whether the factum of the registration of the trademark in the name of appellant is sufficient to grant relief in favor of the respondents or whether something more is required. This has to be considered in view of the submission of learned counsel for the appellant that the trademark cannot exist in vacuum and in view of their being a non-user of trademark since 1981, the respondents are not entitled to any protection.

Quoting from the Cluett Peabody & Co. Inc. vs Arrow Apparals, passed by His Honour S. Kapadia in Bombay High Court, their Honours held further in paragraph 26:

Though delay be itself would not be a defense but if there was a non-user for a long period of time the mark would lose its distinctiveness or the mark is then permitted to die for non-user. The Bombay High Court observed “It is well settled that lapse of time may bring about a change in the state of things in such a manner that to grant injunction in favor of the plaintiff’s would be harsh and it may cause irreparable damage or harm to the rights of the defendants.” Thus the Bombay High Court was of the view that non-use of trademark does have a bearing in action for infringement specially at the interlocutory stage and equities would have to be balanced in such a situation. The Bombay High Court had further laid down certain principles in this behalf which have been reproduced in the impugned judgment. In point (f) of the order dated 28th March, 2000 it is stated that the object of the Act is to protect the right and not be a source of monopoly. In point (j) it has been observed that a mark can lose its distinctiveness by non-user. Thus the enforcement of the right of exclusive use of a trade mark will depend on continuous use of the mark by the proprietor. In point (k) it has been observed that the court shall not protect the right of proprietor unless there is sale of the articles to which trade mark is attached or related. (emphasis added)

In paragraph 23 of the Fedders Judgement, their Honours in the Division Bench held as follows:

Though the object of the Trade Marks Act is to protect the proprietary rights of a registered trademark holder, at the same time the object is not to facilitate any monopoly of such registered trade mark holder, despite non use of the trademark by him as contemplated by the Act. A trademark has no meaning, even if it is registered, unless it is used in relation to goods and/or services. A Trademark which drops out of the use, dies when there are no goods offered for sale as there is no use of the trademark. The mark can lose its distinctiveness by non use, where non use is on the part of registered trade mark holder but not on account of external factors beyond the control of such registered trade mark holder.

After the pronouncements of their Honours at the Division Bench, the aspect of non use in relation to defense set up in infringement action has notably been discussed in the following three rulings.

In Sun Pharma vs Cipla, His Honour R. S. Endlaw was dealing with a situation where the Defendant took up a defense that the Plaintiff has not used the registered mark for considerable length of time and was, therefore, disentitled for any relief, much less interim. His Honour examined at length and held the following in paragraph 19:

The law laid down thus appears to be that trade mark cannot be got registered and held by persons as ?investors? only and with no intention whatsoever to use the same in connection with any goods and services. Even though I feel that in present times of encouraging creativity and rights in ?abstract properties? viz in domain names, there should be no bar to professionals / intellectuals creating rights in marks and being permitted to profiteer from them and there is a need for re-think on this position, I find that even within the frame work of the existing law, in the present case, there is sufficient trade connection between the registered trade mark and the business/activities of the plaintiff and the plaintiff cannot be termed as a mere trafficker in the trade mark. The Apex Court itself noted the complexities and delays in modern times in starting a business and without the mark being taken off the Register, I find that action for infringement of registered trade mark cannot be defeated for disuse. We have in recent times also seen new scientific research finding well known brands in the field of pharmaceuticals to be harmful and the said research findings being reversed after a decade or more. It would be travesty to allow to be extinguished rights in such well known brands in the interregnum. Such rights have come to be known as ?intellectual properties? and there is no reason why facets of tangible property which can be bought and retained by persons who have no use therefor and merely as investors, ought not to apply to ?intellectual property? as well. In present day times of surrogacy, when the child may not belong to the mother from whose womb born and of sale for premium of automobile number plates, there is no reason why insistence on owners using or intending to use the mark or why restrictions in the name of trafficking, ought to continue vis-?-vis trade marks.

However, in this case, His Honour also found evidence that the Plaintiff was not sitting on the mark and was in fact, acting on it.

In the following two cases, neither the Court found any evidence of any use by the proprietor of the mark nor found any circumstances which prevented him from using it. The cases, as they turned out rightly, were dismissed on this ground alone.

In Smithkline Beecham Plc. & Anr vs Sunil Sarmalkar, His Honour Valmiki J. Mehta dismissed the suit of the Plaintiff, where the Defendants were no longer appearing on the ground of non use alone. In paragraph 7, His Honour held:

So far as the fact that the trade mark PANAMAX is registered in favour of the plaintiffs is concerned, the same cannot be disputed, however mere registration of a trade mark cannot confer a right unless goods have been sold under the said trade mark. The entire issue of distinctiveness qua the trade mark is necessarily with reference to sales made under a trade mark. If there are no sales there cannot be distinctiveness……

Quoting paragraphs from Fedders and Needle Industries, His Honour also observed that the Plaintiff did not even file a single document with respect of the tablet. The Judge held in paragraph no. 11:

So far as the alternative case of passing off with respect to the trade mark PANAMAX is concerned, even that right with respect to passing off has to be established by prior use of the trade mark PANAMAX by the plaintiffs as compared to the defendants. Actual use, as already stated above, is only by showing sales in the market. Sales admittedly have not been proved and established on record. A self-serving statement in an affidavit by way of evidence cannot be a substitute for actual discharge of onus of proof which is required to be done by leading credible evidence and which surely could have been done in this case inasmuch as if the plaintiff no.1 has huge sales it was not difficult at all for the plaintiff no. 1 to prove the sales of the paracetamol tablets under the trade mark PANAMAX.

In more recent pronouncement of Allergan Inc vs Intas Pharmaceuticals, His Honour Valmiki J. Mehta was dealing with the infringement case set up for trade marks BOTOX and BTX-A, both registered marks.

The Defendant stated that it has no conflict whatsoever with Botox and the Plaintiff conceded that the trade mark BTX-A, despite registered since the year 2002, was never used till 2012 in India. The Plaintiff stressed that even without the use of the mark, the registration should confer rights to prevent someone else using an identical/deceptively similar mark.

Relying upon Needle Industries and Fedders, His Honour held in paragraph 6:

A reference to the aforesaid para shows that though registration of the trademark is intended to confer ownership rights qua the trademark which is registered, however, the object is not to facilitate any monopoly of such registered trademark holder despite non-use of the trademark. The Division Bench has also observed that a trademark has no meaning, even if it is registered, unless, it is used in relation to goods and services. The Division Bench has categorically observed that the trademark which drops out of the use dies when there are no goods under the trademark available for sale.

In paragraph 8, His Honour held:

A reading of the aforesaid two judgments leaves no manner of doubt that the entire object of trademark law in conferring ownership rights by registration of trademark is that the trademark becomes distinctive qua the goods on account of the sale of goods with such trademark in the market.

If there is no sale, there does not arise the issue of distinctiveness, and mere registration without sales with the trademark does not entitle grant of relief of infringement or passing off. Not only there is no distinctiveness without user of the mark but the judgments observe that the object of registration is not to allow a person to squat on the trademark i.e. continuation of the claim to the trademark without using the same.

Though the counsel for the Plaintiff relied upon the judgements of the Supreme Court for protecting persons claiming transborder reputation and use in special circumstances, His Honour categorically held that since the pleadings made no mention about any transborder reputation or any circumstances preventing the company to launch the product, the reliance was misplaced.

Though the matters shall travel to the Appeals Court but what is clear from the ruling is this:

The law pertaining to non use is a given. If you are not using the mark for a considerable length of time, merely flashing a registration certificate shall not help, more so when you are seeking interim protection against a person.

2 Comments

Filed under In Accordance With Law, IP reviews

2 responses to “No Rights In A NON-used, Registered, Trademark?

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