India, over the years, has seen a considerable increase in the use of intellectual property. As per the Annual Report 2021-221 published by the Department of Promotion of Industry and Internal Trade, Government of India, 5,695 patent applications and 19,456 Trademark applications had been filed as of 31 October 2021. Therefore, the protection and preservation of intellectual property has become imperative. Alternatively, conflicts have also become unavoidable and have resulted in burdening the already over-worked Courts. In such a scenario, access to mechanisms of alternate dispute resolution is not just a positive but also a pragmatic approach.
In recent years, the Indian legislature has taken numerous steps to promote alternate forms of dispute resolution, including mediation. While there is no specific legislation guiding mediation in IP disputes, a pertinent provision in this regard is Section 12-A2 of the Commercial Courts Act, 2015 ("Act”). At the outset, it is important to note that under the said Act, the definition of “commercial disputes” includes; intellectual property rights relating to registered and unregistered trademarks, copyrights, patents, design, domain names, geographical indications, and semiconductor integrated circuits3.
Now, in terms of Section 12-A, a suit which does not seek any urgent relief cannot be instituted unless the Plaintiff exhausts the remedy of “Pre-Institution Mediation”. Section 12-A further stipulates that the process of mediation shall be completed within a period of three months from the date of application made by the Plaintiff for initiating the mediation process. An additional extension of two months may be granted with the consent of the parties. Pertinently, any settlement arrived at in pursuance of the said Section, shall have the same status and effect as an arbitral award on agreed terms under Section 30 (4)4 of the Arbitration and Conciliation Act, 1996.
The manner and procedure for conducting the pre-institution mediation is provided under The Commercial Courts (Pre -Institution Mediation and Settlement) Rules (“Mediation Rules”), which were also introduced in 20185. As per the Rules, a party to the commercial dispute may make an application in the prescribed form along with a fee of INR 1000/- to the appropriate authority for initiation of mediation. The Authority shall thereafter issue a notice to the opposite party to appear and give consent to participate in the mediation process on a prescribed date which shall not be beyond the period of ten days from the date of issue of the notice. Where the opposite party refuses to participate, the Authority shall treat the process as a non-starter and make a report accordingly which shall be provided to the applicant and the opposite party. Where both the parties agree to the mediation process, the Authority shall appoint a mediator and fix a date for appearance before the mediator. The Rules also provides for procedure for conducting mediation which includes but is not limited to maintaining confidentiality, holding meetings jointly and separately with the parties, presentation of settlement proposal before the mediator etc. Where the parties reach a settlement, the mediator shall reduce the settlement terms in writing and get it signed by both the parties. The mediator shall provide the settlement agreement in original to both the parties and submit a signed copy to Authority. Where no settlement is arrived at and the mediator is of the opinion that no settlement is possible, it shall accordingly submit a report to the Authority.
It is a well-known fact that traditional legal system is tedious and time consuming. There are several reasons attributable to it including the lengthy procedures such as pleadings, examination of witnesses etc. In comparison to the same, mediation offers a much more simplified and informal process which can help parties resolve their disputes in a timely manner. Section 12-A and the Mediation Rules adhere to these principles and prescribe for a time bound process and simplified procedure for conducting mediations.
Another relevant factor to bear in mind is that confidentiality is one of the corner stones of mediation. While suits are adjudicated in open courts and the orders are available for the public at large, mediation is a confidential process and is conducted behind closed doors. Bearing this in mind, the Mediation Rules also provide for such a safeguard and stipulates that the mediator, parties or their authorized representatives or counsels shall maintain confidentiality about the mediation and the mediator shall not allow any stenographic, audio or video recording of the mediation sittings6. Over and above that a duty is cast on the mediator7 to be faithful to the relationship of trust and confidentiality reposed in him and not interact with the media or make public details of commercial disputes, being mediated by him or any other allied activity carried out by him as a mediator, which may prejudice the interest of the parties to the dispute.
SECTION 12-A - MANDATORY OR DISCRETIONARY:
When Section 12-A was introduced, it was unclear whether its application was mandatory or only discretionary in nature. While some High Courts interpreted it to be mandatory, a few other High Courts took opposing views. This ambiguity has now been set aside by the recent decision8 of the Supreme Court of India, whereby the apex court has clarified that Section 12-A is a mandatory provision and suits filed in violation of the same are liable to be rejected. Whilst discussing the importance of mediation, the Supreme Court observed that:
“……on the other hand, as noticed by this Court in Vikram Bakshi (supra), mediation offers a completely new approach to attaining the goal of justice. A win-win situation resulting from assigning a greater role to the parties themselves, with no doubt, a spirit of accommodation represents a better and what is more in the era of docket explosion, the only meaningful choice. The realization has been growing over a period of time, that formal court rooms, long drawn-out proceedings, procedural wrangles, mounting and crippling costs, delay, which never wanes but only increases with the day that at least, in certain categories of cases, mediation can be the way out. It, undoubtedly, requires a complete change in the mindset. The change in approach, undoubtedly, can be achieved only if the litigants become aware of its benefits in comparison with the great disadvantage in waiting in the serpentine que for the day of reckoning to arrive in a court of law. The role of the Bar is vital in taking mediation forward. With increase in population and a skewed Judge -population ratio and a huge spiraling of litigation in the courts, it is logical, just and imperative, to attempt and persevere in out of the box thinking. We can no longer afford to remain in the past. A clean break with the past is urgently needed. What was a mere writing on the wall as early as in the last decades of the previous century has become the harsh reality. It is important that the courts also adapt to the changing times. At least when the Parliament has decided to move ahead, it becomes the court's duty not to greet it with undue skepticism. It becomes necessary to fulfill the intention of the parliament by realizing the true role of judiciary….”
COURT ASSISTED MEDIATIONS:
The Supreme Court has aptly observed that it is the duty of the courts to adapt to changing times and assist the Parliament in fulfilling its intentions. It can be confidently said that Indian Courts have also playing a pivotal role in adoption and implementation of mediation and a successful example of the same would be the settlement of trademark disputes.
One of the recent instances is the well – known case of “COKE STUDIO vs COOK STUDIO” before the Delhi High Court. As per the facts presented before the Court, Nikhil Chawla (Plaintiff) is the proprietor of a firm, “The Chawla Group” which operates an online platform named “COOK STUDIO” engaged in food vlogging, production of food related videos and online culinary training. Coca – Cola Company (Defendant) being the registered owner of the trademark “COKE STUDIO” served a notice on the Plaintiff calling upon him to cease and desist from using the mark “COOK STUDIO” for his blog. Therefore, the Plaintiff filed a suit9 for declaration of non-infringement of a registered trademark “COKE STUDIO”.
The Single Judge directed the parties to consider settling their disputes amicably and referred the matter to mediation. In pursuance thereof, the parties reached a settlement and a joint memo was signed by the parties wherein it was, inter-alia, agreed that the Plaintiff would adopt “Cook Pro 6” instead of “COOK STUDIO” by November 30, 2022. It was further agreed that the Defendant would not interfere with the Plaintiff's use of the “Cook Pro 6” mark and the registration thereof. In lieu, the Plaintiff agreed to withdraw all application for registration of the “COOK STUDIO” mark and withdraw his suit.
In 2021 also, Calvin Klein Trademark Trust filed a suit10 for infringement of its registered trademarks “Calvin Klein”, “CK” (word/logo). The matter was referred to the Delhi High Court's Mediation and Conciliation Centre for exploring the possibility of settlement. Pursuant thereto the dispute was amicably settled and a settlement agreement was signed by the concerned parties. The settlement agreement was taken on record by the Court and accordingly decreed.
Similarly, in several other trademark infringements and passing off suits instituted by Giani S. Foods Private Limited11, Tata Sons Private Limited12, Hindalco Industries Ltd.13 the matter was referred to mediation and came to be amicably settled between the parties.
It is apposite to point out that in each of these cases, considering that the matter had been resolved through mediation, the Delhi High Court directed refund of Court Fees. This direction was made in line with Section 16 of the Court Fees Act, 1870 and the decisions of the Supreme Court and Delhi High Court in Afcons Infrastructure Limited v. Cherian Varkey Construction Company Private Limited14 and Nutan Batra v. Buniyaad Associates15respectively. Section 16 states that when the Court refers the parties to any mode of settlement specified in Section 8916 of the Code of Civil Procedure, 1908 (“CPC”), the Plaintiff will be entitled to receive a certificate from the collector authorizing refund of full amount of Court fees. The said section 16 was introduced into the Court Fees Act, 1870 simultaneously with the enactment of Section 89 of CPC in the year 1999. As noted by the Delhi High Court in Nutan Batra (supra), Section 16 was also inserted apparently with the object of providing some incentive to resort to methods of Alternative Dispute Resolution. The Court also clarified that Section 16 would be applicable not when the matter is referred for settlement but when the parties have been able to reach a settlement after a reference to ADR under Section 89 of the CPC. The Court then, inter- alia, held that if a plaintiff is able to demonstrate that the case falls within the requirements of Section 16, refund of the full amount of the court-fee ought to be granted.
It may be noted here that one of the several benefits of mediation is that it is a cost-effective mechanism and helps parties save large amounts of monies which could be wasted in litigations. The refund of Court fees can therefore be said to be in line with the objective of mediation and can definitely prove to be an incentive for parties to adopt mediation.
The use of trademark and other intellectual property is prevalent in our everyday life for instance, advertisements, products, packaging, services etc. and therefore, increases the likelihood of its infringement as well. Thus, having an effective and efficient alternate dispute resolution mechanism is the need of the hour. The Indian legislature and the Judiciary have been playing an active role in the implementation of mediation as an alternate dispute resolution mechanism. As can be seen from the above instances, mediation has assisted in quick and successful resolution of trademark disputes. Thus, it can be hoped that the recent trend shall continue and may even encourage Courts and litigants alike, to adopt and promote mediation as a viable option for resolution of disputes.
2. Inserted by The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018
3. Section 2 (1) (c) (xvii) of Commercial Courts Act, 2015
4. An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute.
5. Further amended by The Commercial Courts (Pre-Institution Mediation and Settlement) Amendment Rules, 2020
6. Rule 9 of The Commercial Courts (Pre -Institution Mediation and Settlement) Rules, 2018
7. Rule 12 of The Commercial Courts (Pre – Institution and Settlement) Rules, 2018
8. Patil Automation Private Limited and Others vs Rakheja Engineers Private Limited 2022 SCC OnLine SC 1028
9. Nikhil Chawla vs The Coca – Cola Company, CS (COMM) 312 of 2022
10. Calvin Klein Trademark Trust vs Ektarfa Garments Private Limited and Others, 2021 SCC OnLine Del 3696
11. Giani S. Foods Private Limited vs Keshav Aggarwal and Another 2022 SCC OnLine Del 384
12. Tata Sons Private Limited vs Bharat Bhushan Udiniya and Others 2021 SCC OnLine Del 5499
13. Hindalco Industries Ltd. vs. Amit Agrawal 2021 SCC OnLine Del 4601
14. (2010) 8 SCC 24
15. 2018 (255) DLT 696
16. Refrence of suit by the Court for settlement through arbitration, mediation, conciliation or judicial settlement including settlement through Lok Adalat.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.