GUEST POST: SHREESH CHADHA DELHI HIGH COURT PROVIDES CLARITY TO THE “PRIOR USER OF TRADEMARK” DOCTRINE

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This post is authored by Shreesh Chadha, Vth Year, Jindal Global Law School

Recently, a single judge bench of the Delhi High Court had the opportunity to consider the defence of ‘prior user’ as mentioned in S. 34 of the Trademarks Act, 1999 (Act). The provision states that a registered user of a trademark cannot interfere with the rights of a person using the trademark prior to either the use of such registered trademark, or prior to the date of registration. This provision enables a defendant in a trademark infringement suit to show that the right to the trademark actually belongs to him, irrespective of the registration of such trademark.

The Delhi High Court in Peps Industries Private Limited vs Kurlon Limited CS COMM 174/2019  opined that for the defendant to be successful in utilising the ‘prior user’ defence, he must show continuous and consistent use of the trademark.

BRIEF FACTS:

It was the Plaintiff’s case that they had been using the trademark- “NO TURN” since 2008, for which the registration was granted on 4th February,2011  w.e.f. 2nd January, 2008. The Plaintiff had been using this trademark in relation to their products consistently since the abovementioned date, and in August 2018, discovered that the Defendant had also adopted the trademark “NO TURN”, basis which a cease and desist notice(s) was issued to the Defendant on 7th August, 2018 and 21st September, 2018.

The ‘prior use’ defence was invoked by the Defendants in reply to said notice(s) in their reply dated 31st October, 2018 and subsequently an application for registration was moved by the Defendant before the Registrar of Trademarks on 24th December,2018.

A suit came to be filed praying for permanent injunction against the Defendants from using the Trademark “NO TURN” or any deceptively similar trademark, whilst alleging that there has been infringement and passing off on the part of the Defendants. An ad interim ex-parte injunction was also sought by the Plaintiff, and was granted, the vacation of which has been prayed for by the Defendants.

ARGUMENTS:

The Plaintiff argues that in addition to being the registered owner of the trademark “NO TURN” they have been consistently using it for a period of 11 years as is evident from invoices, brochures etc. They also argued that the Defendant has not put anything on record to show that they were the prior users of the trademark or had used the same in conjunction with their products.

The Defendant reiterated that they are protected by S. 34 of the Act by virtue of being prior users. S. 34, of the Act provides for the affirmative defence of ‘prior user’ in a trademark infringement suit. This affirmation gives precedence to the rights of any person found to be using the trademark prior to the registration of the trademark by the plaintiff in an infringement suit. Therefore, the proprietor of the trademark, in this case the Plaintiff, would not be able to restrict the Defendant from using the disputed trademark- “NO TURN” or an identical trademark, if the latter is able to prove that they were actively using the same since before the date of registration.

They also argued that the trademark “NO TURN” has been used along with their brand KURL-ON, as a representation of the characteristics of their mattresses. Further, the ex-parte injunction is causing damage both monetarily, and to the brand value.

 

ISSUES BEFORE THE COURT:

  • Whether the Defendant is entitled to protection as ‘prior user’ of the Trademark?
  • Additionally, whether the Defendant is using the trademark as a ‘descriptive’ mark?

HOLDING:

The Court reiterated 3 principles as observations by relying on precedents (Para 13).

  • Rights of a registered user of trademark are not absolute.
  • The claim of passing off is independent of the Act.
  • Prior use must be continuous in relation to the goods.

While holding that a collective reading of the Act would show that an action for passing off on the basis of the defence of ‘prior use’ would be unaffected by a registration provided under the Act, and that a passing off action can lie even against a registered user, the Court analysed the evidence placed on record by the Defendant.

The Court opined that the invoices placed on record by the Defendants, from the year 2007, do not use the trademark “NO TURN” consistently. The invoices for 2007 and 2011 refer to the trademark as “No Turn Mattress Label”, the invoices for 2012 and 2015 read “No Turn Mattresses”, invoices for 2010 and 2017 mention “No Turn Label” and so on. Therefore, there has not been continuous and voluminous use of the trademark by the Defendants, and the protection under S. 34 of the Act cannot be accorded to them and no passing off can be claimed by the Defendants as against the Plaintiffs.

In answer to the second question, the Court held that the Defendant was not using the trademark as a brand but as a symbol of quality, and therefore no protection can be accorded to the Defendant.

The Court went one step further to hold that since the trademark “No Turn” is itself descriptive and there is nothing on record to show that it’s use by the Plaintiff has reached the status of distinctive or well known, the interim injunction prayed for by the Plaintiff cannot be granted.

ANALYSIS OF THE JUDGEMENT:

The Delhi High Court has rightly given due importance to the fulfilments of the elements under S. 34 of the Act, for a defence of ‘prior user’ to succeed. The Madras High Court in Kamat Hotels (India) Limited vs Royal Orchid Hotels Limited W.P. (C) 26544/2011 (appeal dismissed by the Supreme Court of India) had raised the threshold of invoking S. 34 of the Act. While goving due consideration to the intention of the Legislature by holding the words “continuously used that trademark” of prime significance to S. 34, the Delhi High Court reiterated the principle that there should be “commercial continuity” in the use of the trademark by the Defendant. This means that the right of the prior user existed in the market specifically over that trademark in relation to the goods or service.

It cannot be gainsaid that the scheme of S. 34 (being a non-obstante clause), read with S. 28, (which begins with the words “Subject to other provisions of the Act”) leads to the conclusion that the rights of a prior user are superior to the registered user. This is the established position in law, as stated by the Supreme Court in S. Syed Mohideen v. P. Sulochana Bai, 2016 ( 66 ) PTC 1 ( SC ). However, another perspective to this issue of ‘prior user vs. prior registration’was raised in Neon Laboratories v. Medical Technologies 2015 (64) PTC 225 (SC), wherein the Supreme Court was faced with a situation where the proprietor of the registered trademark had not used the registered trademark for a long period of time, as against the prior user who had been consistently using the disputed trademark. In this case, the Supreme Court held that the non-use of the registered trademark would mean abandonment of the same.  Such a perspective existed in the current matter, to the opposite effect. Here, the proprietor of the registered trademark was also the consistent user, and it was the prior user who was intermittent in usage. Had this perspective been considered by the Delhi High Court, a conclusive decision could have been given on disregarding flimsy defences of ‘prior use’ by holding intermittent or non-use of trademarks as abandonment of the same even by alleged prior users.

Moreover, the Court could have elucidated on the factual scenario in this case. The trademark application before the Registrar was moved by the Defendant belatedly in 2018 upon receipt of the cease and desist notice(s) by the Plaintiff. Due diligence was shown by the Plaintiff in that, the application was opposed before the Registrar of Trademarks. In retrospect, the argument of the Plaintiff in this case, that the defence of ‘prior user’ as invoked by the Defendant is an afterthought, raises pertinent questions. Does the non obstante provision under S. 34 trump the legal principles laid down by S. 31 of the Act? Would a mere defence of ‘prior user’ always require complete consideration of evidence, even when the Plaintiff had duly registered and consistently used the trademark? What if in such a situation, no ad interim injunction was passed? The lack of clarity in this regard, even after the high threshold of invoking the ‘prior user’ defence, may result in adverse consequences and unwarranted litigation for the Plaintiff. Further, surrounding circumstances should be taken into account, so that such challenges to a suit are dismissed at the threshold.

It is also pertinent to note that the Delhi High Court itself in Radico Khaitan Ltd. vs M/S. Devans Modern Breweries Ltd. CS COMM 724/2018  , had held that the dicta of the Supreme Court in S. Syed (above) would not come to the aid of a defendant raising the defence of ‘prior user’ in a suit of infringement of trademark. The current matter was a suit of infringement of trademark, and the Defendant had cited S. Syed to assert the ‘prior user’ defence.

Therefore, while reiterating established positions in law, the Delhi High Court did not exercise the opportunity to illustrate the law further on the issue of S. 34 of the Act.