Rights of the Registered Trademark Holder
Prior User of a Descriptive Trademark
Peps Industries Private Limited
CS (COMM) 174/2019 16th March, 2020
In the present case, Peps Industries Pvt. Ltd. (hereinafter referred to as "the Plaintiff") is the owner of registered trademark "NO TURN". The Plaintiff had registered the same under Class 20 for mattresses, wall beds, adjustable beds, sofas, pillows, cushions and other related products in the year 2008. The mark was granted registration in February 2011 with effect from January 2008.
Since 15.01.2008, the Plaintiff had been continuously, consistently and uninterruptedly using its trademark NO TURN in relation to its products besides other brands. In August 2018, the Plaintiff came across the alleged dishonest use of the trademark 'NO TURN' by the Defendant. Therefore, the plaintiff issued a cease and desist notice dated 07.08.2018 to the Defendant. However, the Defendant did not respond to the said notice and continued using the trademark despite a second notice issued by the Plaintiff to the Defendant dated 21.08.2018.
Thereafter, the Defendant responded to the two notices of the Plaintiff vide a reply dated 31.10.2018 claiming that the Defendant was the prior user of the trademark NO TURN and had been using the same since 2007 i.e. even before the registration of the Plaintiff's trademark.
Pursuant thereof, the Defendant filed an application dated 24.12.2018 for registration of its trademark NO TURN claiming itself to be the prior user of such trademark i.e. 08.10.2007 and had simultaneously applied for cancellation of the Plaintiff's registered trademark on the ground of prior user under Section 34 of the Trademarks Act, 1999. However, the said application for registration of Trademark filed by the Defendant was objected by the Plaintiff before the Registrar of Trademarks.
Subsequently, the Plaintiff approached the High Court of Delhi for seeking a decree of permanent injunction against the Defendant from manufacturing, selling, offering for sale, advertising, providing services directly or indirectly dealing in goods and services under the registered mark 'NO TURN' or in any manner using the Plaintiff's registered mark 'No Turn' or any other trademark which is deceptively similar thereto, amounting to infringement, passing off the defendant's business as that of the Plaintiff or resulting in dilution and tarnishing of Plaintiff's registered trademark.
ISSUES FOR CONSIDERATION
- Whether the Defendant is a prior user of the Mark 'NO TURN' and if yes, whether the Defendant is entitled to protection?
- Whether on the facts of the case Defendant is using the mark as a descriptive mark, thus, entitled to protection and hence no injunction can be granted in favour of the Plaintiff?
CONTENTIONS OF THE PARTIES
The Plaintiff contended that the use of the trademark 'NO TURN' by the Defendant is for the identical goods and the same constitutes an infringement of the registered mark of the Plaintiff. Also, the Plaintiff was in continuous use of the trademark 'NO TURN' since January 2008 which was evident from the trademark registration certificate, orders and invoices of 'NO TURN' labels for an uninterrupted period of 11 years.
Furthermore, the Plaintiff also contended that the use of the trademark 'NO TURN' by the Defendant is descriptive in nature as reflected in the broucher of the Defendant which conspicuously reflects that the mattresses would not have to be 'turned over' and extends to describe the quality of the mattresses.
The Defendant contended that the trademark 'NO TURN' had been used by the Defendant since the year 2007 prior to the filing date of the application by the Plaintiff for registration of its trademark in the year 2008. Thus, the Defendant claimed itself to be the prior user of the trademark 'NO TURN' and claimed for the protection of its rights, in the absence of registration, under Section 34 of the Trademarks Act, 1999.
Additionally, the Defendant argued that the mark 'NO TURN' had been used by the Defendant along with its brand KURLON which is a well-known trademark and had acquired the distinctiveness in the business of mattresses and does not lead to any confusion or damage of goodwill of the Plaintiff.
DISCUSSION AND FINDINGS
With regards to the first issue, the Court dealt with the rights of the registered trademark holder vis-à-vis the other registered trademark or a prior user in accordance with the Trademarks Act, 1999.
The Court in view of S. Syed Mohideen v. P. Sulochana Bai (2016) 2 SCC 683 discussed the rights of the registered holder of the trademark as per Section 28 and observed as under:
"10.)... 28. Rights conferred by registration - (1) Subject to the other provisions of this Act, the registration of a trade mark shall, if valid, give to the registered proprietor> of the trade mark the exclusive right to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act.
(2) The exclusive right to the use of a trade mark given under sub-section (1) shall be subject to any conditions and limitations to which the registration is subject.
(3) Where two or more persons are registered proprietors of trademarks, which are identical with or nearly resemble each other, the exclusive right to the use of any of those trademarks shall not (except so far as their respective rights are subject to any conditions or limitations entered on the register) be deemed to have been acquired by any one of those persons as against any other of those persons merely by registration of the trade marks but each of those persons has otherwise the same rights as against other persons (not being registered users using by way of permitted use) as he would have if he were the sole registered proprietor."
"26. A bare reading of this provision demonstrates the following rights given to the registered proprietor of the trade mark:
(i) Exclusive right to use the trade mark in relation to the goods or services in respect of which the trade mark is registered.
(ii) To obtain relief in respect of infringement of trade mark in the manner provide by this Act."
Further the Court discussed the rights of the prior user protected under Section 34 of the Trademarks Act, 1999 in light of Kamat Hotels (India) Ltd. v. Royal Orchid Hotels Ltd. & Anr. and Pioneer Nuts and Bolts Pvt. Ltd. v. M/s Goodwill Enterprises and observed that:
"11.)... 34. Saving for vested rights -Nothing in this Act shall entitle the proprietor or a registered user of registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods or services in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date prior--
(a) to the use of the first-mentioned trade mark in relation to those goods or services by the proprietor or a predecessor in title of his; or
(b) to the date of registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor of a predecessor in title of his, whichever is the earlier, and the Registrar shall not refuse (on such use being provided) to register the second mentioned trade mark by reason only of the registration of the first- mentioned trade mark."
"13. Essentially, what section 34 provides is a defeasance of the right of the proprietor or registered user of a registered trade mark, in a certain specific eventuality. That eventuality is where another person is using a trade mark identical with or nearly resembling a registered trade mark in relation to goods or services in relation to which that person or a predecessor-in-title has continuously used that trade mark. Before the protection under section 34 can be availed of, the conditions which are spelt out in section 34 must demonstrably exist..."
In view of the aforesaid discussion, the Court deduced the following principles with regard to the rights of the registered trademark of the same or similar trademark or prior user of the same or similar trademark:
"13.)...(i) Rights of registered owner of the Trademark though exclusive, are subject to various provisions and thus not absolute.
(ii) The rights of a person alleging passing off the goods of the other party as that of its own, emanate from the common law and not from the provisions of the Trade Marks Act, and thus, independent from the rights conferred by the Act.
(iii) The right of the registered owner of the trademark is not higher in order to right of the person using an identical trademark or resembling thereto in relation to the similar goods and services if the other party has been continuously using the said trademark prior to the user of the trademark by the registered owner. The user by other party has to be continuous, distinct from the user which is separate, isolated or disjointed and requires the commercially continuous use of mark in relation to the same goods or services. A defendant seeking to set up a defence of prior use under Section 34 of the Trade Marks Act has also to prove the volume of sales. Mere issuance of an advertisement would not constitute user of the mark."
Therefore, on collective reading of the Trademarks Act, 1999 the Court held that the three constituents of passing off are goodwill, misrepresentation and damage and the same are considered to be classical trinity under the law of the land. The Court further opined that a passing off action may be taken against a registered proprietor of the mark but trademark exists independently of the registration which extends the protection under the statue.
In other words, registration is merely a recognition of the rights pre-existing in common law and in case of dispute arising between two registered proprietors, the assessment of the better rights under common law is essential as the same would define whose rights between the two registered proprietors are better and superior.
In light of the present facts and circumstances, the Court concluded that as per the invoices placed on record by the parties, it is apparent that the Defendant had been using the label 'NO TURN' since the year 2007, however, the sales made by the Defendant are irregular in various years and do not indicate a continuous and voluminous use of the mark 'NO TURN' by the Defendant.
Henceforth, the Court ruled that the Defendant cannot succeed by taking the defence under Section 34 of the Trademarks Act, 1999 and also no corollary can be drawn that the Plaintiff by making misrepresenting is tarnishing and riding on the goodwill of the Defendant and thereby causing harm to the Defendant.
With regards to the second issue, the Court at length discussed the case of Marico Limited v. Agro Tech Foods Limited (2010) 174 DLT 279 (DB) and concluded that the reference of the mark 'NO TURN' as used by the Defendant was to describe the quality of the mattresses of the Defendant and nowhere Defendant intended to use the same as a trademark in relation to its business of mattresses.
Further, the Court opined that the use of 'NO TURN' on mattresses and in the brochure by the Defendant intended that the mattresses which do not require to be 'turned around' were labelled as 'NO TURN' and the same was not used as a trademark in the course of business of the Defendant.
In addition to the above, the Court observed that though the Defendant is the prior user of the mark 'NO TURN' and has been using the same since 2007, however, the use of the mark by the Defendant is intermittent and not voluminous and the Plaintiff being the registered owner of the trademark 'NO TURN' the defence under Section 34 of the Trademarks Act, 1999 is not available with the Defendant.
On the aforesaid reasoning, the Court held that the Plaintiff is the registered owner of the trademark 'NO TURN' however, the relief of injunction was not granted to the Plaintiff as there were not enough evidences on record to establish that the trademark of the Plaintiff had acquired distinctiveness or is known to be a well-known trademark.
The Court, in the present case, had at length discussed the rights of the registered trademark owner in accordance with Section 28 and rights of the prior user of the trademark in accordance with Section 34 of the Trademarks Act, 1999.
Further the Court discussed the concept of descriptive trademark which prima facie discusses the quality or characteristics of a product and cannot be granted protection under the law of the land.
However, the benchmark for protection and enforcement of descriptive trademark is relatively high and further the acquired distinctiveness of the trademark has to be appropriately established.
Thus, in the present case, the Court by its reasoned order had refused to grant an injunction on the basis that the alleged infringing mark is descriptive in nature and does not tarnish the goodwill of the Plaintiff. Also the same is being used as a label by the Defendant and not as a trademark per se.
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