Background:
In a landmark judgment titled Kent Cables v. Kent RO, pronounced by Justice Jyoti Singh on May 30, 2023, the Delhi High Court permanently restrained Kent RO from manufacturing and selling fans under the trademark “KENT”. The court analyzed complex legal propositions and, based on prior use and goodwill, concluded that the action of KENT RO to enter the market for fans would amount to passing off the goods of Kent Cables.
Facts of the Case:
Kent Cables filed a suit seeking permanent injunction restraining Kent RO from using their registered trademark “KENT” in electronic/electrical goods including, but not limited to Fans, lighting products, wires and cables etc. As a counter-blast to the suit, Kent RO filed a suit seeking permanent injunction restraining Kent Cables from using the registered trademark “KENT” of Kent RO in any electric appliances including but not limited to iron water heaters, all types of fans etc. Kent Cables is a brand with leading repute that deals in products such as electrical switches, wires, and cables. It asserts use of the trademark “KENT” in relation to the above-mentioned goods since the year 1984, while the mark “KENT” was first registered in class 9 on 8 September 1986 . On the other hand, Kent RO was well-received by the public after the launch of the reverse osmosis technique in the Indian market in 1999. However, it has been using the mark “KENT” since 1988 for its oil meters. In 2004, it also expanded its business into kitchen appliances and vacuum cleaners. With time, it obtained registration of the mark “KENT” in multiple classes such as 07, 09, 11, and 21.
To summarise the legal position, both Kent Cables and Kent RO were registered proprietors of the trademark “KENT”. Kent Cables has been using this trademark since 1984, while Kent RO has been using it since 1988. They were co-existing only until Kent RO decided to expand into “Fans” in 2022, which triggered the present suit between the parties. It is, however, pertinent to note that Kent Cables was allegedly using the mark “KENT” for Fans since 1984, but it did not have a registration for the same.
Contentions on behalf of Kent Cables:
Kent Cables made various claims to assert infringement by the defendant. While acceding to the concurrent use of Kent Cables and Kent RO it was argued that, firstly, Kent RO lacks the right to utilize the mark “KENT” for fans, wires, and lighting, as its registration in Class 07, 09, and 11 does not pertain to these specific products. Therefore, Kent RO has no right to adopt the mark “KENT” in respect of the products for which Kent Cables is the prior adopter. Secondly, as a prior user of the trademark “KENT”, Kent Cables is entitled to an injunction against Kent RO as held in Syed Mohideen v. P. Sulochana Bai. Thirdly, referring to KEI Industries v. Raman Kwatra, it was contended that since wires are allied and cognate to fans, Kent RO’s expansion into fans would constitute infringement. Lastly, due to the phonetically, visually, and structurally identical nature of the marks along with complete identity in competing products, i.e., fans, Kent RO was guilty of infringement under Section 29(2) of the Trademarks Act, 1999.
Contentions on behalf of Kent RO:
While countering the submissions raised by Kent Cables and asserting its own infringement claims, Kent RO raised a number of arguments. Firstly, it was contended that all the mandated essentials of infringement mentioned in S. 29(2)(a) were fulfilled, including the presence of an identical/similar trademark, identical/similar goods and likelihood of confusion/association. Secondly, referring to FDC Limited, Kent RO asserted that fans (Class 11) are not allied and cognate to wires (Class 9), for which Kent Cables has registration, as the purpose of fans is ventilation and the purpose of wires is transmission of electricity. Hence, no case for infringement by Kent Cables was made out. Thirdly, making a case for infringement by Kent Cables, it was contended that even if the goods of Kent RO registered under the trademark KENT differ from the goods of Kent Cables, any use of the trademark “KENT” by Kent cables, even for dissimilar goods will constitute infringement under S. 29(4). Fourthly, countering the claim regarding the longevity of use of Kent Cables, it was contended that they could not show sales of fans since 1984 and hence were unable to establish goodwill, which is a sine-qua-non for claiming infringement under Section 29(4). Lastly, Kent Cables failed to establish a positive reputation for the mark “KENT” in fans and the evidence they presented was inadequate to demonstrate its usage dating back to 1984.
Decision of the High Court:
The Court rendered a well-reasoned order in the domain of infringement and passing off after examining a series of judgments and authoritative sources, which will be further explained below:
A. Infringement
There are twin conditions that must be fulfilled for claiming infringement under Section 29 of the act:
- The impugned mark must be identical/similar.
- The rival goods must be identical/similar or allied and cognate.
While the first requirement regarding the similarity of the marks was met, a complication arose concerning the second condition. It is firmly established that one can assert infringement claims solely if they possess registration pertaining to the contentious products. In the instant case, neither of the parties has trademark registration for fans, therefore, in order to show infringement, one will have to prove that fans are either similar or allied and cognate to their respective registered products. Furthermore, the court negated the argument of Kent Cables claiming that fans and wires are allied and cognate to each other. Specifically, KEI Industries, a case relied upon by Kent Cables, which supported this argument, was overruled while the present judgment was reserved. In Rawan Kwatra v. Kei Industries, the Division bench overruled the finding in the aforementioned case and concluded that fans cannot be held to be allied and cognate to switches, wires and cables owing to the different nature and purpose of both the products. Ergo, the mandate of S. 29 was not fulfilled, and hence, a case of infringement was not established.
B. Prior Use
Kent Cables primarily relied on the argument that it held superior rights as the prior user of the mark in relation to fans. It is a well-settled law that the prior user is entitled to a greater protection and prior registration is a completely irrelevant factor while determining the case of passing off. In case of rival claims with respect to the same rights in a mark, the answer largely depends on “Who gets first?”. In other words, in cases involving competing claims for a similar mark, the court must determine as to which party entered the market first. Kent Cable’s position regarding its use of the mark in fans since 1984 was strongly disputed by Kent RO. The court acceded to the contention of Kent RO regarding the user claim of Kent Cables since 1984 and stated that there was no material on record to show sales commencing from 1984. The Court, however, recognised evidence establishing the use of the trademark “KENT” for the sale of fans beginning in 2006. Irrespective of whether the user claim is 1984 or 2006, any which way, Kent Cables has been using the mark in fans way before Kent RO who was set to launch the product in 2022. Hence, considering the damage that Kent RO could cause to the reputation of Kent cables, it was restrained from expanding its business into fans.
C. Passing Off
Even if the case of infringement was not made out, an injunction could still be granted if it was established that Kent RO was trying to pass off the goods of Kent Cables by entering the market for fans. The common law remedy of passing off is based on the premise that “no one should encash upon the goodwill/reputation of another by misrepresenting their goods as its own”. In order to succeed in a passing off case, it is not essential to prove a long user to establish reputation, but it would depend upon volumes of sales and the extent of advertisement. While Kent Cables submitted a multitude of documents to support their case, Kent RO raised doubts regarding the authenticity of said documents. The court however, did not go into the said question as the same was a matter of trial. Nonetheless, it asserted that Kent Cables had successfully presented evidence of prior usage and passing off by showcasing its brand, reputation, and the potential for public confusion if Kent RO were to market its fans. It took into account the test of imperfect recollection of a person with average intelligence, and stated that the introduction of fans by Kent RO is likely to cause confusion in the minds of the public and would also affect the clientage of Kent Cables.
D. Doctrine of Acquiescence
The doctrine of acquiescence is an equitable principle that comes into play when a party possessing a right chooses to passively witness another party engaging in actions that contradict that right, both during the act and even after the violation has occurred, thereby implying their consent or agreement. He cannot afterward complain. The court while negating the argument for injunction by Kent RO observed that they had knowledge about the infringement of the mark that they allege, at least since 2011 since they sent a cease and desist notice to Kent Cables from using the mark for its fans division. They never approached the court regarding the issue until 2022 only when they filed a case as a counter-blast to the suit filed by Kent Cables. Therefore, their knowledge about the alleged infringement and acquiescence about the same does not entitle them to get an order in their favor.
Analysis:
The present case decided by the court stands as a landmark judgment that reinforces the faith of non-registrant of a mark. The court granted an injunction order in favor of Kent Cables, who did not have registration for their fans division restraining Kent RO from entering the said market. A few principles and takeaways that emanate from the judgment are as follows:
- The Plaintiff can succeed in an action of passing off where trade name is similar or identical even in cases where nature of activities is dissimilar.
- Courts should decide cases keeping in view the “first in the market” test. In other words, one is not required to prove long use in order to claim passing off rather the real test is “who gets first in the market”. If two traders claim to have independently invented the identical mark, the one who can demonstrate prior use will prevail.
- This judgment serves as a caveat to businesses with identical trade names, cautioning them against entering a new market where a competitor already exists with the same name.
- In order to claim the action of passing off, Plaintiff must show three essential factors: a. Plaintiff’s products have gained a distinctive reputation in the market b. the defendant is trying to misrepresent their goods as the goods of the plaintiff and Such misrepresentation is likely to damage to the Plaintiff’s business. In addition to these three essential elements of passing off, Delhi High Court in Century Traders v. Roshan Lal Duggar, underscored the importance of establishing prior user for succeeding in an action for passing off.
- Goodwill in passing off cases is determined through the evidence of sales and advertisements.
- Doctrine of acquiescence is an important factor in determining the cases of infringement and passing off.
- Prior adoption of the mark is not sufficient to claim injunction. The mark must be actively used for the specific goods which are subject to dispute between the parties. Even if the disputed goods are similar or allied and cognate to the registered goods, it is essential to show prior use in order to claim passing off.
- With respect to allied and cognate goods, the classification of goods alone is not a determinative factor in deciding the similarity between them. The goods of the same description can be classified into different classes, while those of different descriptions can be classified under the same class. Therefore, the assumption that goods falling under the same class are inherently similar or allied and cognate to one another is incorrect.
Further Developments:
Post the announcement of the judgment on May 30, 2023, an interesting development unfolded concerning this decision, highlighting a gray area in intellectual property jurisprudence. On June 26, 2023, the Registrar of Trademark exercising its power under Rule 124 of Trade Marks, Rules 2017, declared the Trademark “KENT” of Kent RO to be a well-known mark.[i] This development has significant implications which would open up the case to broader considerations. With the label of a well-known mark to its credit, Kent RO would enjoy a comprehensive protection across all classes.
Kent RO might file an appeal against the present judgment before the Division Bench and the following four questions might arise for the court’s consideration:
- Who would prevail in the conflict between prior user of a mark and holder of a well-known trademark?
- Would the special characteristic accredited to well-known marks apply retrospectively and can a suit for passing off be filed against a prior user?
- Can Kent RO prohibit Kent Cables from getting a registration for the “Fans” division?
- Can Kent RO obtain an injunction against Kent Cables?
The law has mostly given primacy to prior user of a mark and has applied ‘first in the market’ test. The Courts, on numerous occasions observed that the “first user” rule is a seminal part of the Act and has kept the same on the highest pedestal. Although a well-known mark has much wider protection, it will be difficult to bring an action against a prior-user of a trademark. Reference ought to be laid on S. 34 of the Trademark Act, 1999 which states that nothing in this Act shall entitle the registered proprietor or registered user to interfere with the rights of prior user. The intention of the legislature while drafting the non-obstante clause is evident that irrespective of the statutory rights granted to a mark, the claim of the prior user would sustain. This would imply that irrespective of a rival trademark being well-known, the prior user rights of a mark would outweigh the latter. The instant case would force the courts to revisit the concept of well-known trademarks. In recent times, a Well-known trademark has become a contentious issue that gives a blanket proprietary right to the owner across all classes and goods. To illustrate the conundrum with an example, suppose a person has been selling steel under the name TATA Steels for 100+ years in a particular region of India, and TATA (well-known mark) owned by Mr. Ratan Tata, who is not aware of the existence of TATA Steels enter the market of steels. In such a case, would TATA’s entry cause “the person of average intelligence” to confuse TATA Steels to be a mark of TATA, and would this imply that TATA would have the power to restrain TATA Steels from using its mark?
To conclude, in the opinion of the author, the grant of the Well-known Trademark to Kent RO would have little impact on the fate of the judgment. The prior-user rights are much superior to any other statutory rights as has been held by the courts in a catena of judgements. It is pivotal for the courts to set forth some guidelines so that the law regarding such conflicts can be settled. It will certainly be interesting to see the kismet of Kent RO.
ABOUT AUTHORS: Chhavi Tokas and Chetan Nagpal are 4th year B.A. LL.B students of University School of Law and Legal Studies, GGS Indraprastha University, Delhi.
End notes:
[i] Publication of the Trademarks under Rule 124 of Trade Marks Rules, 2017, Trademark Journal No. 2110, Page No. 14596(26.06.2023).
