The Delhi High Court, in the case of Mr. Sanjay Chadha Trading as Eveready Tools Emporium and Anr. v. Union of India and Anr., W.P.(C)- IPD 12/2021 decided on 17.02.2022, held that any trademark which is similar to any well-known trademark cannot be registered even if the goods associated with the trademark are widely different in nature.
Mr. Sanjay Chadha trading as Eveready Tools Emporium (hereinafter referred to as “the Petitioners”) filed a writ petition before the Hon’ble High Court of Delhi (hereinafter referred to as “the High Court“) under Article 226 and Article 227 of the Constitution of India, challenging the order dated 22nd September, 2020 (hereinafter referred to as “the impugned order”), passed by the Intellectual Property Appellate Board (hereinafter referred to as “the IPAB“).
The aforementioned order of the IPAB allowed the rectification/cancellation petitions filed by the Eveready Industries India Limited (hereinafter referred to as “the Respondent”), resulting in the removal of the Petitioner’s wordmark “EVEREADY” and logo in Class-8 from the Trade Marks Register (“the Register“).
The Petitioner No. 2 had adopted the trademark “EVEREADY” in 1985, and obtained registration for the same in Class-8 with respect to screw drivers and cutting pliers, with effect from 19th June, 1985.
On 6th January, 2009, through an assignment agreement, Petitioner No. 2 assigned the rights over the aforesaid trademark to Petitioner No. 1, along with goodwill and reputation associated with it. This assignment agreement was made effective from 1st April, 2005.
On the other hand, the Respondent manufactures and sells dry cell batteries, flashlights, CFLs and general service lamps under its brand name and trademark ‘EVEREADY’, and is the country’s largest seller of dry cell batteries and flashlights with 46% and 80% of the respective market shares.
The Respondent has been using its trademark since 1942, and has also obtained registration for it under various classes of the Trade Marks Act, 1999 (hereinafter referred to as “the Act“). The Respondent claims that the trademark as attained the status of a ‘well-known mark’ as per Section 2(zg) of the Act.
In September, 2008, the Respondent became aware of the Petitioners’ trademark, when Petitioners filed an opposition against the Respondent in trademark proceedings. Consequently, in 2009, the Respondent filed a civil suit before the High Court, as well as a rectification/cancellation petition before the IPAB.
In the civil suit, the High Court allowed the Petitioners’ use of their word mark only with respect to screw drivers and cutting plier, and nothing else. Further, it was also directed that if the Petitioners’ registration is cancelled by the IPAB, they shall stop using their word mark even with respect to screw drivers and cutting pliers. No injunction, however, was granted because the rectification/cancellation petition was already filed and pending before the IPAB.
The IPAB passed the impugned order allowing the removal of the Petitioners’ word mark from the Register. Aggrieved by the Order of the IPAB, the Petitioners approached the High Court by way of filing the present writ petition.
ISSUES BEFORE THE HIGH COURT
i. Whether the Respondent’s trademark can be categorized as a ‘well-known trademark’?
ii. Whether the adoption of the mark by the Petitioners is malafide in nature?
iii. Whether the conclusions of the IPAB in the impugned order are correct in the eyes of law and is well-reasoned?
CONTENTIONS OF THE PARTIES
The Petitioners contended that as per admissions made by the Respondent, the Respondent never obtained registration of their mark in Class-8 in respect of hand tools, and its usage is limited to dry cells, batteries, flashlights etc and that the Respondent was well aware of the Petitioners’ use of the mark before September, 2008.
The Petitioners submitted that the Respondent had applied for registration of its mark in September, 1994, and in the examination report issued by the Trade Marks Registry, the Respondent was informed of the Petitioners’ registration of its mark in respect of screw drivers and cutting pliers in Class-8.
Consequently, the Petitioners had filed objection to the Respondent’s registration application, and the Respondent amended the application to exclude screw drivers and cutting pliers from the category of goods for which it sought registration.
Additionally, the Petitioners brought it to the notice of the High Court that in the cross-examination of the Respondent Witness in the civil suit, it has been admitted that the Petitioners are the users and owners of the trademark ‘EVEREADY’ with respect to screw drivers and cutting pliers.
Further, in the civil suit filed by the Respondent, the application for injunction was partly dismissed as there was an acquiescence on the part of the Respondent. The Petitioners relied upon Khoday Distillery Limited (Now known as Khoday India Limited) v. Scotch Whisky Association & Ors. [(2008) 10 SCC 723], and submitted that the Respondent had acquiesced for more than 5 years in the use of the trademark by the Petitioners.
The Petitioners contended that the findings of the IPAB have no evidentiary basis, and are based solely on presumptions. The Petitioners claimed that no evidence was submitted on record by the Respondent to show their use of the trademark before 1985.
The Petitioners relied upon Jabbar Ahmed v. Prince Industries & Anr. [2003 SCC OnLine Del 455] (hereinafter referred to as the “Jabbar Ahmed case“) and submitted that the “onus lies on the applicant to establish the grounds on which rectification is sought by establishing the specific grounds by means of cogent and reliable evidence”, which the Respondent in the present case has failed at.
Furthermore, relying on the case of Cadbury UK Limited & Anr. v. Lotte India Corporation Ltd. [2014 (57) PTC 422 [Del]] (hereinafter referred to as “the Cadbury case”) the Petitioners argued that a mechanical incantation of reputation is insufficient, and the Respondent has to prove that the Respondents have a protectable goodwill and reputation.
The Petitioners also placed reliance on Corn Products Refining Co. v. Shangrila Food Products Ltd. [(1960 1 SCR 968] (hereinafter referred to as “the Corn Products case“) and contended that prior registration is not proof of prior use and it is not permitted to draw any inference regarding the use of a mark based on its presence on the Register.
The Petitioners also contended that the Respondent were unable to prove that the Petitioners did not use the impugned mark continuously. Furthermore, the Petitioners asserted that contrary to the conclusion reached by the IPAB, ‘EVEREADY’ is not an invented word, but a combination of two common English words- ‘ever’ and ‘ready’.
On the other hand, the Respondent submitted that it is one of the most reputed companies in existence with more than 80 years of being in business. Hence, the Respondent’s trademark has acquired the status of a well-known mark under the Act.
Consequently, as per Section 29(4) of the Act, a subsequent adopter cannot use a well-known mark or any mark similar to it even in relation to dissimilar goods, so far as the first adopter and user has a reputation in India, and any subsequent use of the same or similar mark would result in taking unfair advantage of or be detrimental to the distinctiveness or reputation of the well-known mark without due cause.
Hence, the Respondent submitted that the Respondent’s trademark is entitled to be protected across all classes of goods and services. The Respondent argued that in terms of Section 11(2) of the Act, the Petitioner’s trademark cannot be registered as it would be detrimental to the distinctiveness and reputation of the prior trademark of the Respondent.
The Respondent claimed that ‘EVEREADY’ is an invented word, which does not find any mention in the English dictionary. It is also the corporate name of the Respondent No. 3- EVEREADY INDUSTRIES INDIA PRIVATE LIMITED. Therefore, by adopting the trademark ‘EVEREADY’ in 1985 and obtaining registration for it, the Petitioners have acted with malafide as no basis has been given by the Petitioners justifying the use of the invented mark.
The Respondent asserted that the malafide intention on part of the Petitioners was evident from the fact that as per the sales figures and advertisement expenses presented by the Respondent in its rectification/cancellation petition, the sales figure for the year from which the Petitioners claimed to have adopted the trademark, i.e. 1985, is over Rs. 240 crores. It is, thus, not believable that the Petitioners were not aware of the Respondent’s trademark and business.
The Respondent contended that due to their bad faith in adopting the trademark, the Petitioners should not have been granted registration in view of Section 11(10) of the Act. The dishonest nature of the Petitioners was also clear from their illegal use of other well-known marks such as “HMT”, “DELUXE”, “CHAMPION”, “CRAFTSMAN” and “AMUL”, as per documents on record.
In the rectification/cancellation petition, the Respondents had also filed clear and cogent evidence of their use of the trademark from the year 1981 to 2008 in the form of sales figures and advertisement expenses. Whereas, on the contrary, as per the documents presented by the Petitioners, it was clear that Petitioner No. 2 had wound up her business in 2000 and in 2006 her son, Petitioner No. 1, had re-commenced the business. Furthermore, it is pertinent to note that no sales figures was presented by the Petitioners from 2000 to 2005.
Additionally, the Respondent brought it to the notice of the High Court that due to non-filing of renewal request by the Petitioners in 2006, there was no registered proprietor of their trademark when the rectification/cancellation petition was filed by the Respondent. Because of this, the assignment deed executed in 2009 was invalid for the two reasons:
- for a valid assignment deed, the trademark sought to be assigned has to be registered as on the date of assignment, and
- the assignment deed sought to assign the trademark with retrospective effect, which is not permissible under the Act.
The Respondent contended that Section 33 of the Act was not applicable since acceptance of the trademark has to be for a continuous period of five years in respect of the use of ‘registered trademark’.
In this case, the Petitioner’s trademark was not registered from 2006, until it was brought back in 2019. Furthermore, as per Rule 60 of the Trade Mark Rules, 2017, the Registrar has to consider the interests of other affected persons while granting restoration of a trademark. This was not done while renewing the Petitioner’s trademark.
In reference to the Petitioners’ contentions regarding admissions made by the Respondent Witness, the Respondent argued that the evidence led by the Respondent before the IPAB and in the civil suit has to be read in totality and no inferences can be made on the basis of singular, stray sentences in answer of questions asked during cross-examination.
The Respondent stated that non-issuance of injunctions in favour of the Respondent in the civil suit has no bearing on this case, as well as on the IPAB’s findings as the IPAB has an independent jurisdiction.
The orders passed in the civil suit were in the nature of interim orders and therefore, have no precedential value. Further, as per Section 124(4) of the Act, the final order made in rectification/cancellation proceedings are binding on the civil court, and not the other way around.
Therefore, in light of its foregoing submissions, the Respondent argued that there is no error apparent on the face of record in the IPAB’s order, thus, interference of the High Court is not required in exercise of its jurisdiction under Article 226 and Article 227 of the Constitution of India.
DECISION AND FINDINGS
The High Court accepted the contentions raised by the Respondents, and held that the Respondent’s trademark is well-known. Considering the definition of well-known trademarks under Section 2(zg) of the Act, and the material placed before the IPAB, into due consideration, the High Court was satisfied that due to its extensive and continuous usage, the Respondent’s trademark has gained immense goodwill and reputation.
Further, the Petitioners’ reliance on the judgements in Jabbar Ahmed case and the Cadbury case was rejected, as the Respondent had presented sufficient material to claim goodwill associated with the Respondent’s trademark. The judgement in the Corn Products case was also differentiated from the present case, as the present case dealt with identical marks.
The High Court held that the Respondent had also sufficiently corroborated their claim of prior use and continuous use. Consequently, as the Respondent’s trademark was indeed well-known, it was entitled to be protected under Section 11(2) of the Act, whereby no other identical or similar mark could be granted registration even in respect of dissimilar goods and services.
Further, agreeing with the observation of the IPAB, the High Court observed that:
“…goods of both the parties are allied and cognate goods that would be available in super markets and malls. This, the only test to be applied is whether the earlier trade mark is a well-known trade mark and whether the use of the later mark would be detrimental to the distinctive character or repute of the earlier trade mark.”
Additionally, the High Court noted that ‘EVEREADY’ is an invented word, a combination of ‘ever’ and ‘ready’, and the Petitioners’ were unable to justify their adoption and use of it. In this regard, the judgment of Living Media India Limited v. Jitender V. Jain [MANU/DE/0607/2002] was cited by the High Court, wherein it was held that when a trademark is a combination of two words which are:
“…individually descriptive and dictionary word and may not be monopolised by any person but their combination does provide a protection as a trademark if it has been in long, prior and continuous user in relation to particular goods manufactured, sold by a particular person and by the virtue of such user the mark gets identified with that person.”
The High Court held that the Petitioners have not only copied the wordmark, but also the associated logo. On examining the contentions and documents on record, the High Court was of the view that the Petitioners were dishonest and mala fide in adopting and using the trademark.
The Petitioners’ goods are indistinguishable from those of the Respondent’s and hence, the former’s trademark should never have been registered, in view of Section 9(1)(a) of the Act. In light of this dishonesty and mala fide, the High Court held that the Petitioners cannot claim to be honest users of the Respondent’s trademark.
The High Court also observed that there was no use of the Petitioners’ mark from 2000 to 2005, and therefore, their trademark stood abandoned. In 2006, the same was removed from the Register due to non-renewal.
In view of this, the High Court observed that even if the Respondent had knowledge of the Petitioners’ mark in 1999, the cause of action for filing of rectification/ cancellation petition arose when the Petitioners started using their trademark again, that is, in 2008-09.
Moreover, the High Court stated that there is no limitation under law for initiating rectification proceedings. Besides, the High Court was of the opinion that the renewal of the Petitioners’ trademark was invalid as well.
In the issue related to acquiescence, the High Court referred to its earlier observation that the adoption of the marks by the Petitioners was malafide, and there was no continuous use of the said marks. The requirement under Section 33 of the Act that there needs to be acquiescence for a continuous period of 5 years in the use of a registered mark was not satisfied in the present case.
Further, the High Court also cited the IPAB’s relevant observations in this regard, as under:
“…there should be a positive act or an express assent on the part of the right holder to claim the defense of acquiescence… the trademark holder’s express consent to the use of a similar/identical trademark is an essential requirement… the defendant should have demonstrated that the plaintiff expressed assent and encouraged use of the impugned mark. Merely showing delay to sue could not be accepted as sufficient grounds…”.
Therefore, the High Court rejected the Petitioners’ submission of latches and acquiescence.
With regards to the issue of admission of Petitioners’ ownership over the trademark by the Respondent in the latter’s cross-examination in the civil suit, the High Court agreed with the findings of the IPAB in toto, and held that a singular statement made on behalf of the witness in the course of cross-examination cannot be the basis to say that the party has admitted to the case of the other side. Evidence has to be considered as whole, and in reference to the facts and circumstances.
The High Court relied on the judgment of the Supreme Court in Mahendra and Mahendra Paper Mills v. Mahindra and Mahindra Ltd. [MANU/SC/0724/2011] wherein it was held that:
“…whether there is a likelihood of deception or confusion arising is a matter of decision by the Court, and no witness is entitled to say whether the mark is likely to deceive or cause confusion.”
In relation to the validity of the assignment deed, the High Court accepted the submissions of the Respondent, further pointing out that the notice of opposition was filed by the Petitioner No. 2 on 28th March, 2008, when allegedly she had already assigned the trademark to Petitioner No. 1 with effect from 1st April, 2005.
Based on the facts, the High Court stated that it was without a doubt that the assignment deed was a manufactured document with the sole intention to get over the fact of removal of the Petitioners’ trademark due to non-renewal in the year 2006. The contention of the Petitioners that even if the assignment deed was invalid, Petitioner No. 2 would continue to be the proprietor and owner, was also rejected as she had abandoned the trademark from 2000, and further, due to non-renewal, the trademark was not registered after 2006.
On the issue of effect of non-grant of injunction in favour of the Respondent in the civil suit, the High Court was inclined to accept the arguments of the Respondent. The IPAB’s independent jurisdiction, as stipulated under Section 124 of the Act, has to be exercised only on the basis of evidence and material on record before it.
With regards to the Petitioners’ contention that the IPAB’s findings were presumptuous, the High Court pointed out that as per Section 92 of the Act, the IPAB was not bound by the Code of Civil Procedure. While deciding an application for rectification, public interest has to be kept in mind and therefore, maintaining the purity of the Register is in the interest of the public.
With regards to the abovementioned, the High Court relied upon the decision of Hindustan Pencils (P) Ltd. v. India Stationery Products Co. [AIR 1990 Del 19], wherein it was held that if an interim injunction is not granted in an action for trademark infringement,
“…it is the consumer or the purchaser who alone suffers and who ultimately cannot be compensated; therefore, …it will be proper for the Court to take into consideration the interest of the general public.”
Hence, dismissing the petition before it, the High Court held that the impugned order of the IPAB is well-reasoned and does not have any error apparent on the face of record and is not perverse to warrant interference of its jurisdiction under Article 226 and Article 227 of the Constitution of India.
The High Court in the present case has maintained the sanctity of the IPAB by disallowing fraudulent proprietors with mala fide intentions from adopting and registering trademarks which are similar or identical to well-known trademarks.
A brand’s goodwill plays an extremely important role for its respective trademark as the users tend to remember the trademark in consonance with the brand’s goodwill and popularity. Furthermore, in order to claim trademark infringement, it is crucial to prove the continuous usage of the said trademark.
This would be one of the landmark judgements with regards to validity of a retrospective trademark assignment deed in India, thereby raining down on sham assignments and curtailing unnecessary litigation.
-Team AMLEGALS assisted by Ms. Gazal Sancheti (Intern)
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