We are all familiar with the famous processed milk and groceries brand “Mother Dairy”. Mother Dairy Fruit And Vegetable Private Ltd. (“Mother Dairy”) recently filed a suit for trademark infringement against one of the entities that processed milk and milk products to be sold under its brand. One Nalgonda Rangareddy District Milk Producers Mutually Aided Cooperative Union Ltd. (“Union”) agreed to exclusively process, package and supply milk to be marketed under the trademark “Mother Dairy”. The two parties first entered into a Collaboration Agreement; later when disputes arose, they entered into a Settlement Agreement. Mother Dairy has protected its IP rights in its brands and logos by obtaining trade mark and copyright registrations for the same.

Vide this Settlement Agreement, it was agreed that the Union shall not claim any right in Mother Dairy’s trademarks, but was permitted to use the words "Mother Dairy" on the labels for sale of its milk and milk products. Thereafter, a second Collaboration Agreement was executed between the parties for a period of 5 years. Upon expiry of the said term, Mother Dairy sent legal notices to the Union asking it to stop using the trademark “Mother Dairy” and to terminate the Settlement Agreement. Mother Dairy also filed a suit of trademark infringement against the Union stating that by continuing to use the trademark even after termination of the Collaboration Agreement, the Union was violating Mother Dairy’s rights in the trademark and thereby causing confusion in the minds of the consumers.

The Union had been selling its products under this trademark since 1992 and using this trademark in all its communications, advertisements, packaging and other promotional material in Andhra Pradesh. The provisions of the Settlement Agreement permitted it to use the mark/ Logo “Narmul Mother Dairy”. It had withdrawn its application for registration of its logo "Mother Dairy Narmul" and agreed not to oppose the registration of the modified labels as and when registration was sought by Mother Dairy pursuant to the Settlement Agreement only.

Mother Dairy argued that following the expiry of the Collaboration Agreement the Union had no right whatsoever to continue its use of the trademark, even in accordance with the Settlement Agreement.

Pursuant to this, when Mother Dairy had applied for injunction against the Union, the Court recorded that the Union shall comply with the terms of the Settlement Agreement. The present case was an appeal in the High Court of Delhi against this order. Here, the Court held that pending the final adjudication of the suit, parties ought to be governed by their rights under the Settlement Agreement.

The Court observed that the Settlement Agreement specifically permits the Union to use the words “Mother Dairy”, therefore the fact that Collaboration Agreement provided for the Union’s product to be marketed by under Mother Dairy’s marks does not per se extinguish the rights of the appellant under the Settlement Agreement.

The Court ordered that pending the final adjudication of the suit, parties ought to be governed by their rights under the Settlement Agreement, which it stated, was the effect of the ad interim order by the learned Single Judge. No order as to costs was made.

Compiled by: Adv. Sachi Kapoor | Concept & Edited by: Dr. Mohan Dewan

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