Royal Orchid Hotels Limited is prevented by a court's order to name its new hotels 'The Orchid'. Bombay High Court, in an interim order, has restrained Bangalore based Royal Orchid Hotels from using the trademark "The Orchid" on its new hotels or line of business, however, the court has allowed the Royal Orchid Hotels to continue using the mark on its existing hotel properties. The High Court order follows a suit (Kamat Hotels (India) Limited versus Royal Orchid Hotels Limited & Anr. Notice of Motion No. 2552 of 2008 in Suit No. 2224 of 2008; High Court of Bombay)filed by Mumbai based Kamat Hotels (India) Ltd (plaintiff) against Royal Orchid Hotels (defendant) alleging infringement and passing off its trademark "The Orchid". Kamat Hotels is the owner of the registered trademark "The Orchid" used upon and in relation to its five star hotel continuously, as claimed, since 1997.

The Dispute

The dispute hinges on the grounds of infringement, deceptive similarity, prior use and acquiescence or delay in bringing the suit. The Royal Orchid Hotels view the dispute more serious on the issue that who has used the mark first as prior user and honest and concurrent user are good defences to a suit based on action for infringement of the registered mark. The defence of prior use is given under Section 34 of the Trade Marks Act 1999 (the Act).

Registration and Defence of Prior Use

Section 34 of the Act stipulates that a registered user or proprietor cannot interfere with or restrain a third person from using a mark identical or resembling the registered mark which the third party has continuously used from a date prior to the registered mark user's first use of the mark or from the date of registration, whichever is earlier. The provision in effect is an overriding provision preventing a proprietor or registered user of a trademark from interfering with the honest use of an identical trademark or a mark nearly resembling with the registered mark.

The fundamental requirements under the provision are – (1) the use of a mark identical or nearly resembling the registered mark, by a third person, must be in relation to the goods and services for which the first mentioned mark is registered; (2) the use must be a continuous use of the trademark; (3) the trademark must be used by the proprietor in order to avail the protection; (4) the mark must have been used from a date prior to the use of the registered trademark or the date of registration whichever is earlier.

'Use' under Section 34 of the Act mandates notion of continuous use. It is a test of a high order fulfilling the requirement of a commercially continuous use of the mark in relation to goods and services. The expression "continuously used that trade mark" has the specific connotation of vesting of a right in a person when he puts his goods with the mark in the market. A continuous use being distinct from a stray, isolated and a disjointed use, also establishes that a mere adoption of a mark is not sufficient.

Hence, section 34 thus provides for specific requirements which relate to (i) the nature of goods or services in relation to which the mark is used; (ii) the nature and character of use; (iii) the person who must use; and (iv) the date from which the mark should have been used.

Court's Finding

Who has first used the mark/word is often a disputed question of fact. The extent, quantum and nature of the use of the mark, claiming and justifying prior user right, is a mixed question of law and facts.

The distinguishing or essential feature of the mark of Kamat Hotels is the word "Orchid" together with the device of the flower. The Royal Orchid Hotels also employs the same word - Orchid - with the device of a flower as the distinguishing feature. Prima facie, the mark of the Royal Orchid Hotels is an infringing mark therefore it becomes imperative in this situation to evaluate prima facie whether the conditions, as required by section 34, exist in order to protect the vested right, which the Royal Orchid Hotels claims in the use of the mark.

The defence under sec 34 of the Act, if allowed has the effect of diluting the protection granted to a registered mark. Therefore establishment of requirements under sec 34 necessitates cogent materials indicating prior use. There has to be a forceful demonstration of the mark being used in connection with the goods and services for which the registered mark is also being used. Documents showing mere change in name to bring on record the impugned mark by the defendant or attaining proprietorship of the mark "The Orchid" by taking the hotel on lease were not considered by the Court as clear and cogent documentary material establishing prima facie use, much less a continuous use prior to the date of the plaintiff's commencement of the use of the mark. Disclosure of sales figures, in the opinion of the court, is a cogent material to establish a continuous course of use of the mark "Orchid" prior to the date on which the plaintiff commenced use of the mark. Therefore seeking to establish a continuous prior user will require the evidence to be considered in the context of nature of the product, type of sales, territory within which it is sold and the scale of production of the goods/services. The reason is that the statutory presumption under section 28 of the Act loses its significance once prior user under section 34 is established.

The Court prima facie arrived at the conclusion that Kamat Hotels is the proprietor of the mark "Orchid" coupled with the device of a flower and that the Royal Orchid Hotel's use of its mark infringes Kamat Hotel's mark. Further, the Court held categorically that Royal Orchid Hotel's failure in showing any, even prima facie, cogent material supporting continuous use of the mark "Orchid" prior to Kamat Hotel's use is an unsuccessful attempt to establish defence under sec 34 of the Act. However, the Court, led by the consideration weighing in this case that Royal Orchid Hotels had already commenced business by the date on which the proceedings were instituted, moulded the relief in terms of injunction granted not operational in respect of the hotels and business already commenced prior to the date of the order. The interlocutory injunction restrained the Royal Orchid Hotels from any infringing activity in respect of any new hotel or line of business.

The Court was guided by the principle that in determining upon the grant of an injunction, a court can and should make a distinction between situations where business has already commenced and business is yet to commence. Also, in the face of a rectification proceedings brought by Royal Orchid Hotels, the balance of convenience required moulding the relief in such a manner that Royal Orchid Hotels remains protected against damage to the existing business while it is prevented to infringe the registered mark of Kamat Hotels.

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