Recently, the Delhi High Court passed an interesting order in Anubhav Jain v. Satish Kumar Jain, holding that the rights u/s 57 of the Trademarks Act to seek rectification of the register, is independent of the rights u/s 124 which allows the defendant to seek a stay over the infringement proceedings when the validity of the trademark is raised as a defence. This interplay was the point of a previous controversy, which the Supreme Court addressed in Patel Field Marshall case. In this co-authored guest post Pratham Malhotra and Rajat Jain discuss how this order stands contrary to the scheme envisaged by the Supreme Court. Pratham Malhotra is pursuing his law from Rajiv Gandhi National University of Law, Punjab, and is in 3rd year. He is an IP enthusiast and an avid reader. Rajat Jain is a Principal Associate at Vaish Associates Advocate. He is an intellectual property law practitioner based out of New Delhi. He completed his law in 2013 from GGSIPU, Delhi. The authors have clarified that they do not have any real or potential conflict of interest that may be present with the issue discussed in the post. All the views expressed in this post are their personal views. [Long post ahead]
Interplay Between Sections 124, 47 and 57 of the Trade Marks Act, 1999: The Fault in Our Interpretations
Pratham Malhotra and Rajat Jain
On 9th January 2023, Hon’ble Mr. Justice C. Hari Shankar of the Delhi High Court passed a judgement in the case of Anubhav Jain v. Satish Kumar Jain (‘Anubhav Jain‘) that has left the IP fraternity in a fix. While dealing with a petition u/s 57 and 125 of the Trademarks Act, 1999 (‘TM Act‘), the Court had the opportunity to interpret the landmark judgement of the Supreme Court in Patel Field Marshal Agencies v. P.M.Diesels Ltd. 2017 (‘Patel Field Marshal‘), which had put an end to the controversy regarding the interplay between the right to seek cancellation of a registered mark/ rectification of the register (Section 47 and 57) vis-à-vis invalidity of the subject mark as a defence in an infringement suit (Section 124).
However, the interpretation given in the Anubhav Jain case was neither in conformity with the bare
text of Patel Field Marshal, nor with the catena of previous judgements passed by Delhi High Court relying upon Patel Field Marshal. Before delving deep into the ratio and judgement in the Anubhav Jain case, it is pertinent to first highlight the current position of law as laid down by the Supreme Court in 2017 and subsequently followed by the Delhi High Court.
Section 124 & Patel Field Marshal: ‘Stay’ my name!
The Supreme Court’s judgement in Patel Field Marshal has been previously discussed in detail here and here. In our view, in the said case the Supreme Court, inter alia, had made it abundantly clear that the right of seeking rectification of a mark u/s 47/57 is subject to Section 124 of the TM Act, when an infringement suit pertaining to that mark is pending adjudication. The Court made it mandatory for the party to not only raise a plea of invalidity in the suit, but also ensure that the Civil Court frames an issue before filing the rectification petition. Furthermore, upon abandoning such plea, Section 124(3) shall apply, and the right to seek rectification shall be lost forever.
Through this judgement, the Apex Court has overruled the dictum of the judgements on this point, i.e., B. Mohamed Yousuff v. Prabha Singh Jaswant Singh (Madras High Court) and Data Infosys Ltd. v. Infosys Technologies Ltd. (Full bench of Delhi High Court) (‘Data Infosys‘), which had held that the right to seek rectification u/s 47 and 57 of the TM Act does not stand extinguished if in an infringement suit, the Court finds the plea of invalidity to be prima facie not tenable or if the rectification petition u/s 47/57 is filed after the expiry of the period given u/s 124(2) or (3).
Post Patel Field Marshal era: Delhi High Court’s search for meaning
After the Patel Field Marshall decision, question regarding maintainability of a Section 124 application was posed before the Delhi High Court in Abbott Healthcare Pvt. Ltd. v. Raj Kumar Prasad 2017 (‘Abbott Healthcare I‘). In this case, the rectification proceeding was filed after the institution of the infringement suit and no issue regarding invalidity was framed. The court relied on the Supreme Court’s decision and dismissed the application, holding that powers u/s 124 cannot be exercised without framing an issue of invalidity.
Subsequently, in Abbott Healthcare Pvt. Ltd. v. Raj Kumar Prasad 2018 (‘Abbott Healthcare II‘), the Plaintiff filed one application for framing of issues and another u/s 124 of the TM Act for seeking leave of the Court to file the rectification petition and stay of the suit. The Court, again relying on Patel Field Marshal, allowed the application and held that if the rectification petition is filed after the institution of the infringement suit, permission of the Civil Court regarding prima facie tenability of the plea of invalidity must be obtained for the prescribed statutory authority (IPAB) to entertain the rectification petition.
The above-mentioned interpretation of Patel Field Marshal was affirmed by the Delhi High Court in multiple judgements including: Country Inn Private Limited vs Country Inns and Suites 2018 (‘Country Inn’); Arun Chopra v. Kaka-Ka Dhaba Pvt. Ltd. 2019; Perfetti Van Melle S.P.A. v. Suresh Nanik Lilaram Hingorani 2022; MOROCCANOIL Israel Limited v. MODICARE Limited 2022.
Furthermore, in Brahmos Aerospace Pvt. Ltd. v. FIIT JEE Limited 2019, the Division Bench of Delhi High Court was hearing a challenge against the order of a single judge that framed the issue of invalidity of trademark and allowed the application u/s 124. The Court cited Patel Field Marshal and noted that since FIITJEE had not moved to the IPAB prior to the institution of the infringement suit by Brahmos, the question of prima facie tenability of its plea of invalidity must be determined. Accordingly, the single judge’s order was upheld.
Anubhav Jain: Deviation from the norm
However, the above understanding of the Delhi High Court received an unexpected twist in the Anubhav Jain case. In this case the Respondent-Plaintiff contested maintainability of an application for rectification u/s 57 read with Section 125 seeking cancellation of its registered mark on the basis of non-fulfilment of the procedure prescribed u/s 124. The Court first noted that for Section 124 to apply, the Petitioner-Defendant must make a plea of invalidity as a defence in the infringement suit, which was not done in the present case. Thus, according to the Court, Section 124 shall have no application on this sole ground.
However, the Court then proceeded to assume that such a plea of invalidity was raised in the suit. In light of this assumption, the following findings were made:
According to the Court, the Patel Field Marshal judgement indicates that the right to seek rectification u/s 124 is an ‘independent’ right and is in addition to the right conferred u/s 57. Thus, the application of Section 124 does not take away a party’s right to independently invoke its remedy u/s 57 (Para 24-26).
It was observed that since the Supreme Court in Patel Field Marshal was not concerned with the right available to a person u/s 57 of the Trade Marks Act, the judgment cannot be said to be an authority on the point that once an infringement suit is filed against the Defendant, the Defendant loses its right to seek cancellation of the Plaintiff’s trademark u/s 57. Therefore, Section 57 is not subject to Section 124, especially because no clause in Section 57 makes it subject to any other provision. (Para 28 & 29).
The Court ultimately held that due to the above findings, the Civil Court’s permission is not required before instituting the present petition (Para 31). Hence, in other words, the Court has held that since the rights u/s 57 & 124 are independent of each other, the Civil Court’s permission is not required before filing a rectification petition u/s 57 even if the plea of invalidity is made in the suit.
The Delhi High Court vide its subsequent order dated 08.02.2023 in the said case, partly allowed the rectification petition filed in the matter by remanding the matter back to the Registrar of Trade Marks, and directed the Registrar to decide the questions framed by the Court after hearing the parties. Interestingly, the Court, till the decision of the Registrar, restrained the Registered Proprietor from asserting any right consequent to such registration in any judicial proceedings which may be pending vis-à-vis the said marks.
What’s the deviation?
Firstly, a bare perusal of the above findings indicates that the Anubhav Jain judgement has misinterpreted Patel Field Marshal. The Supreme Court never stated that the rights u/s 47/57 and 124 are independent. In fact, Patel Field Marshal has held the opposite. Para 28, 30 and 32 of Patel Field Marshal, as noted previously, have clearly made the rights u/s 47/57 subject to Section 124 by holding that if an infringement suit is pending in which the plea of invalidity is raised, the prescribed statutory authority shall only come into seisin of the matter if the Civil Court is satisfied that an issue of invalidity must be framed in the suit. Further, if the Civil Court does not find a triable issue on the plea of invalidity, the aggrieved party’s remedy would not be to move u/s 47/57 but to challenge the Civil Court’s order in appeal. Moreover, the abandonment of the plea of invalidity invites the application of Section 124(3), due to which the right to seek rectification is lost forever.
Secondly, it appears that the Delhi High Court in Anubhav Jain has ignored Para 32 of Patel Field Marshal, which had directly dealt with the rights u/s 47/57 (Section 46/56 of the 1958 Act). Thus, the observation in Anubhav Jain that the Supreme Court was not concerned with the rights u/s 57 is completely misplaced.
Thirdly, the findings in Anubhav Jain are, in essence, the findings of the Delhi High Court in Data Infosys, which has already been overruled in Patel Field Marshal. Moreover, no previous judgements of the Delhi High Court that have interpreted Patel Field Marshal were considered while passing Anubhav Jain.
In view of the above reasons, we think that there is a strong possibility of the Anubhav Jain judgement being set aside by the Division Bench of Delhi High Court, if challenged, especially since the Supreme Court’s primary objective in making the rights u/s 47/57 subject to Section 124 was to avoid multiplicity of proceedings.
But what if the plea of invalidity is not made in the suit and issue is not framed? Then would Section 124 still apply, making it necessary to take the permission of the Civil Court and get the issue framed before filing the rectification petition? According to Anubhav Jain, Section 124 does not apply in such situations, and thus, seeking permission is not required. However, Abbott Healthcare II and Country Inn seem to indicate the contrary. Since co-ordinate benches delivered the judgements and there is a lack of an authoritative pronouncement by a bench of higher strength, this issue continues to stay in the air and may become subject to future litigation.
Furthermore, with regards to the abandonment of plea u/s 124(3) of the TM Act, in our view, since the embargo under this section operates in a situation where the issue is not framed by the Civil Court, it must also operate if the plea of invalidity is not made in the suit at all. Though the literal reading of Section 124 of the TM Act does not support the aforesaid view, it can be logically drawn from Patel Field Marshal, as non-raising of the plea of invalidity cannot be considered on a better pedestal than not getting an issue framed by the Civil Court.
While going through the judgment in Anubhav Jain, several other questions have popped up as well, namely whether the abandonment of the right to file rectification is absolute or whether any new cause of action in future will again reinstate the right, such as in cases of non-use of a registered trademark for a continuous period of 5 years as envisaged under Section 47 of the TM Act; or whether the non-application of Section 124(3) in suits of passing off in which the Defendant has a registered trademark, the Plaintiff pleads invalidity and an issue is framed, but the Plaintiff does not file a rectification petition, won’t create a possible anarchy as envisaged by Supreme Court in Patel Field Marshal.
It would also be interesting to see the impact of the Delhi High Court’s order dated 08.02.2023 in Anubhav Jain case wherein the trademark registrations of the Plaintiff are kept in abeyance which formed the genesis of the infringement case pending before the District Court of Delhi.
Thus, the judgment in Anubhav Jain has given food for thought to the IP fraternity and compelled us to ponder whether there is a need for an amendment in the TM Act or a relook into Patel Field Marshal itself.