The Trade Marks Act, 1999 palpably holds under Section 34 the first user rule. Section provides that a proprietor of a trade mark does not have the right to prevent the use by another party of an identical or similar mark where that user commenced prior to the user or date of registration of the proprietor. This is commonly referred to as “First user” rule which is a seminal part of the Trade Marks Act.
While Section 28 confers an exclusive right on the registered proprietor of a trade mark to use the mark and also to prevent others from using an identical or deceptively similar mark, one of its exception is enunciated under Section 34 of the Act. Section gives rights to a user when its user is prior to the user of the proprietor and prior to the date of registration of the proprietor, whichever is earlier.
It is now well settled that the Trade Marks Act, 1999, has territorial operation within the territory of India. Whereas, the rapid expansion of the Indian economy and the fact which cannot be denies is that the Indian economy is an ever growing effective as well as efficient platform for various well known and other foreign brands which ensures huge returns at lower investment. Though the Act has a territorial operation but the recognition of the right of a well known trade marks having cross border reputation is already discussed and fairly accepted by the Hon'ble Supreme Court in its landmark case of N.R. Dongre and others versus Whirpool Corporation and others” reported as 1996 5 SCC 714.
However, when it comes to Section 34 and interpretation of the word prior use, Indian courts have held that the prior use must be understood to refer to “use” within the territory of India and not abroad. The Hon'ble High Court of Calcutta in a case titled “Aktiebolaget Jonkpoing Vulcan versus V.S.V. Palancichamy Nadar (reported as AIR 1969 Cal 43) while considering the provisions of the Trade and Merchandise Marks Act, 1958 observed and held the similar view while holding that the provisions of the Act must be understood to refer to use within the territory of India and not abroad.
What comes out from the above is that the Trade Mark law is not extraterritorial that use of trademark in foreign countries under foreign registration can be “use” within the meaning of the Trade Marks Act. Moreover, the preamble of the Act confined its operation to the territorial limits of India. Section 1(2) of the Act extends it to the whole of India. All the above referred principles makes it amply clear that the word “use” employed in Section 34 of the Act is use within India. Therefore, if a proprietor of a trade mark set up a case of prior use of outside India under Section 34, then such defence is of no avail to him.
In Kores (India) Ltd versus Whale Stationary Products Ltd. reported as 2008(36)PTC 463(Bom) the Plaintiff which was a Company incorporated in the year 1936 in India filed a suit for infringement and passing off agaisnt the Defendant therein i.e. a Company incorporated in Austria and selling products in India through a dealer. The case of the Defendant was that it was set up in the year 1887 (i.e. prior to the Plaintiff) outside India and later on the distribution activities were expanded into Europe, Asia and Africa inculding in countries like Spain, Mexico, Frnace, Austria, Netherlands, China and Romania among other countries. The Defendant further claimed to be in the process of moving an Application for rectification of the trade mark registered in the name of the Plaintiff. The Defendant clearly established the prior use of the trade mark than the Plaintiff though outside India. However, rejecting the contention and not providing any benefit of savings provision stipulated in Section 34 the Court held that the Section applies to a situation where a person has continously used a trade mark from a date prior to the use of the registered trade mark in relation to those goods or services by the proprietor of the mark prior to the date of registration of the mark within the territory of India. The Court while noting the absence of any record of prior use of the trade mark by the Defendant in the territory of India held that the Defendant is not entitled to the protection of savings provision under Section 34.
There is following exception to the aforesaid principle enunciated by the Courts in India:
· TRANSBORDER REPUTATION
If the proprietor claiming prior use outside India has goodwill in India then he can rely on the reputation, if his reputation is strong enough to negative that of the other proprietor in India. The proprietor has to satisfy the Court about his transborder reputation and this can be done if and only if, he can claim an antecedent or concurrent goodwill in the jurisdiction of India which will only be the case if he has customers here in India who relates the product under the concerned trade mark as of the concerned foreign entity.
· Taking a departure from the general rule in context of Section 34 the High Court of Delhi through Hon'ble Justice Sanjiv Khanna (presently Judge of Supreme Court) in Lowenbrau AG and Others versus Jagpin Breweries Ltd. and Others (reported as 157(2009)DLT791) keeping in view the peculiar facts and circumstances of the case took into consideration the prior use of the trade mark by the Defendant outside India. In that case, both the companies i.e. Plaintiff and Defendant were foreign companies and both of them were using the trade mark all over the world and wanted to expand in India and in these circumstances the position as it exists abroad and usage abroad were held to be important in terms of Section 34 of the Act.
Indian market is opening up and foreign or multinational brands have moved and/ or are likely to move and similarly, Indian brands are likely to move out and expand into markets abroad. National and manmade borders and boundaries are gradually getting diluted and the entire world can now be seen as a common market. Therefore, in such circumstances it may not be proper to ignore ground realities in all the cases by blindly following the principles evolved by the Courts; the position in the home country and abroad should be equally important. Trans-border reputation has been accepted and recognised in India even when the products are not being marketed and sold in India. Each case therefore may have to be decided on its own merits and factual background. In the end there should be protection of trade mark and fraudulent use must be prevented. Hence, justice should prevail.