A Full bench (Three Judges) of the Delhi High Court recently held that prior permission of the Court is not necessary under Section 124(1)(b)(ii) of the Trade Marks Act, 1999 (TMA) for filing a rectification petition before the IPAB during the pendency of an infringement suit.

A reference was made to the Full bench of the Delhi High Court in terms of the order of the Division Bench (Two Judges) dated August 27, 2012 because of conflicting decisions on whether prior permission of the Court is necessary under Section 124(1)(b)(ii) of the Trade Marks Act, 1999 for instituting proceedings for rectification of a registered trademark, during the pendency of a suit.

The two conflicting views with respect to this provision were:

  1. That the proceeding for rectification of the defendant’s trademark cannot be initiated without prima facie satisfaction of the Court trying the infringement suit and that the suit cannot be adjourned or stayed in terms of Section 124(1)(b)(ii) of the Act to await the outcome of the rectification proceedings initiated by the plaintiff before the Intellectual Property Appellate Board- if the procedure outlined therein is not followed;
  2. The second view was that proceedings for rectification before the Intellectual Property Appellate Board can be initiated without the permission of the court trying the infringement suit and the consequence of not obtaining permission of the court trying the infringement suit was only that the applicant cannot seek stay of suit.

In order to examine the rival contentions and the court’s decision, Section 124 of the TMA is reproduced below:

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.[Emphasis Supplied]

To understand the issues surrounding the judicial conflict, a narrative of the factual matrix of the case at hand is vital. Infosys Technologies Ltd., (the respondent in the appeal) filed a suit against Data Infosys Ltd., (Appellant) claiming permanent injunction against infringement of its registered trademarks in “Infosys” and allied marks. The trademarks of respondent were registered in classes 7, 9 and 16 under the Trade and Merchandise Act, 1958. It also sought relief against the use of its corporate name, including the use by the defendant of the domain name www.datainfosys.net which, amounted to infringement of its registered trademarks. The defendants contested the suit and argued that the field of activity of both parties were different. It was argued that while respondent was in the field of software development, the defendant was providing internet services within India only and thus the two business activities were different.

During the pendency of the suit, the defendant’s application for registration of the trademark ‘Data Infosys’ was accepted and granted registration in classes 9, 38 and 42, upon which the defendant filed an application for amendment of the written statement for incorporation of its registrations which was allowed by the Court.

The respondent thereafter sought rectification of the registered trademark ‘Data Infosys’ before the Intellectual Property Appellate Board. Upon becoming aware of this proceeding, the defendant moved an application before Court alleging that the filing of the rectification proceeding, during the pendency of the suit, without leave of the court constituted an abuse of process and that the proceeding before IPAB were therefore not maintainable. The Single Judge dismissed the application of the Defendant. The Full Bench took note of the divergent views, espoused by both counsel for the respondent and the appellant. It was argued that permission under Section 124 (1)(b)(ii) is a condition precedent and mandatory before initiating the rectification proceedings and if such proceedings are filed without obtaining such permission, such proceedings would not be maintainable. The defendants relied on the view taken in AstraZeneca UK Ltd. v. Orchid Chemicals and Pharmaceuticals Ltd., 2006 (32) PTC 733 (Del) and affirmed by the Division Bench in United Biotech Pvt. Ltd. v. Orchid Chemicals and Pharmaceuticals Ltd., 2012 950) PTC 433 (Del)(DB).

On behalf of one of the intervening parties, the view was furthered before the Full Bench that Section 124 is in the nature of a special provision, which relates to situation wherein the defendant seeks to impeach a registered trademark’s validity in the context of, or during the pendency of infringement proceedings. It was argued that under the scheme of the Trade Marks Act, Sections 47 and 57 are general provisions that give exclusive power to the IPAB in matters regarding rectification/removal of a trademark. Section 124, which is schematically placed after the general power conferred upon IPAB, for rectifying the trademark and hence, being a special provision, would prevail over the general provisions.

It was argued that the principal objective of Section 124 was to avoid any conflicting decisions as to the validity of registered trademarks. Section 124(1)(b)(i) mandates the stay of the suit if a rectification petition is pending at the time. However, where no rectification petition is pending, 124 (1)(b)(ii) operates and puts an obligation on the litigant seeking deferment of the suit proceedings to apply to the Court and satisfy it that prima facie the plea is tenable. Thereafter, on a prima facie satisfaction with respect to the tenability of the plea of invalidity, an issue has to be framed and the suit adjourned. The applicant seeking to rely on the plea of invalidity then is provided with a timeframe of three months within which, it has to approach the IPAB. Thus, the mechanism, i.e. Section 124(1)(b)(ii) is to be seen as a mandatory step to ensure that litigants do not frustrate an infringement proceeding or trial in a suit. Thus, in view of the above, it was seen that the following contingencies were covered under Section 124:

  • When a defendant sets up the plea of invalidity of the plaintiff’s registered trademark (Section 124(1)(a));
  • When the defendant raises the defence of its registered trademark under Section 30(2)(e) of the Act and the plaintiff sets up the plea of invalidity of the registered trademark of the defendant (Section 124(1)(b));
  • When the plea for rectification is pending before the filing of an infringement suit, the court stays the suit and awaits the final disposal of the challenge before IPAB Section 124(1)(b)(i);
  • When no such proceeding is pending at the time of institution of the suit, on prima satisfaction of the plea of invalidity of the plaintiff’s or the defendant’s trademark, the court may frame an issue regarding the same and adjourn the suit for a period of three months to enable the party concerned to apply to IPAB for rectification of the trademark.

In this regard, Section 125 mandates that in the course of an infringement suit, where the invalidity of registration of a mark plea is set up, then, ‘notwithstanding anything contained in section 47 or Section 57, such application shall be made to the Appellate Board and not to the Registrar.’ This means that necessarily, where the registration of mark, allegedly infringing, is questioned after initiation of suit, the person setting up such invalidity (of mark) plea has to apply to the IPAB, which alone acquires jurisdiction to the exclusion of the Registrar (who otherwise possesses jurisdiction under Sections 47 and 57 of the Act).

  • Where the Court grants time to the party to approach the IPAB, within the stipulated time and the party fails to do so, it loses the right to argue that the suit is to be stayed.

Decision

The Full Bench of the Delhi High Court revisited the relevant provisions of the Trade Marks Act, 1999 and observed as under:

  1. IPAB has exclusive jurisdiction to consider and decide upon the merits of a plea of trademark registration invalidity – applying Section 47 and 57 of the Act- in the context of an infringement suit based on such registered trademark.
  2. The two situations whereby the infringement action is stayed, are when the rectification proceedings are instituted before the filing of the suit (Section 124(1)(b)(i)) and after the plea of invalidity is held to be prima facie tenable under Section 124(1)(b)(ii)) to enable the party urging invalidity to approach IPAB.
  3. Where the civil court based on its prima facie assessment states the invalidity plea is not tenable or where the litigant does not approach the IPAB within the time granted (i.e when the court holds the plea to be prima facie tenable) the only consequence is deemed abandonment of the invalidity defense in the infringement suit. However, access to IPAB to invoke its exclusive jurisdiction to test the invalidity of a trademark registration is not precluded or barred in any manner whatsoever. Thus, access to IPAB is not dependent on the civil court’s prima facie assessment of tenability of a plea of invalidity of trademark registration.