Read the text of the judgment here.
In a significant development for IP and constitutional law, the Delhi High Court ruled that the statutory discretion vested in quasi-judicial officials such as Patent Controllers and Trademark Registrars cannot be interfered with by their higher ups, such as the Controller General (CG).
But first a bit of background. Several months ago, the CG had issued an office order disallowing “substantial” amendments in trademark applications. The key part of the office order (Clause 3) is reproduced below:
“3. No request for amendment shall be allowed which seeks substantial alteration in the application for registration of trademark. The substantial amendment in the trademark, proprietor details, specification of goods/services (except deletion of some of the existing items), statement as to the use of mark shall not be permitted. “
This was then challenged by the IPAA (Intellectual Property Attorneys Association). The Delhi High Court ordered the CG to re-examine his order after hearing the IPAA and other interested parties. Pursuant to this, the CG heard the parties but then went on to exhibit what is commonly termed as “confirmation bias” (a form of bias where decision makers effectively affirm their earlier decision, often ignoring evidence to the contrary) . In his order, the CG essentially opined that since most amendments pertaining to the date of first user were in the nature of “fraud” and imposed a high cost on competitors and others, they ought to be prohibited.
In the immediate aftermath of the CG’s order, one of the authors of this piece had taken issue with the CGs cost benefit analysis, noting that: “More importantly, section 22 of the trademarks act which permits amendments to trademark applications does not leave much scope for the kind of interpretation that the CG is proffering. Or support the kind of policy based cost benefit analysis that he predicates his decision on. My guess is that a court of law will reverse this.”
Mr Chander Lall, founding partner of Lall and Sethi and counsel for the IPAA, then wrote a very persuasive critique of the CG’s order. This was followed by a ghost post on the same issue, alleging that the statutory discretion vested in patent examiners was effectively curtailed by orders from the higher ups’ to sacrifice quality (of examination) at the altar of quantity, by issuing more patents, almost “factory style”!
The CG order was challenged through a writ petition in court.
It was in response to this challenge that the Delhi High Court (comprising Chief Justice and J. Endlaw) ruled that Clause 3 of the CGPDTM’s office order dated 8th June, 2012 (see on page 11 here) was to be stuck down/quashed. The High Court effectively ruled that a statutory authority exercising quasi-judicial functions could not be divested of this discretion by guidelines issued by a higher authority.
In particular, the court relies on Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd. to strike a distinction between purely administrative and quasi judicial functions. While guidelines could be issued to govern the exercise of “administrative” discretionary power, it was illegal to do so in so far as judicial/quasi judicial functions were concerned.
The quasi-judicial Registrar: A number of arguments were advanced by the IPAA to demonstrate that the Registrar was exercising a quasi-judicial power under section 22, as highlighted below:
(i) the Registrar of Trademarks as per Section 2(ze) of the TM Act is a Tribunal;
(ii) vide Section 127(a) of the TM Act, the Registrar of Trademarks has all the powers of a Civil Court for the purposes of receiving evidence, administering oaths, enforcing the attendance of witnesses, compelling the discovery and production of documents and issuing commissions for the examination of witnesses;
(iii) vide Section 128 of the TM Act, the Registrar, before exercising any discretionary or other powers vested in him adversely to a person applying for the exercise of that power is required to give such a person an opportunity of being heard;
(iv) Section 91 of the Act provides for the remedy of appeal to any person aggrieved “by an order or decision of the Registrar under this Act, or the rules made thereunder” and which would include an order under Section 22 of the Act; and,
(v) an order under Section 22 of the Act is in the course of registration of trademarks under Sections 9 and11 of the Act and which is in exercise of a quasi-judicial power.
The court agreed with most of the contentions of the IPAA above. In particular, the court notes that the decisions of Registrars are reasoned speaking orders, arrived at after hearing representations from both parties, and complying with the provisions of natural justice – typical characteristics of quasi-judicial authorities.
Given that section 22 called for a quasi judicial determination, the court held that this determination could not be interfered with, even by a higher authority such as the CG.
This decision will go down as a landmark one in constitutional and IP history. For it elevates statutory authorities to a fairly high position, protecting them from the vagaries of executive top down decision making. Hopefully this will be the start of a healthy debate and discussion on the independence of statutory authorities (one that was raised during the recent NPPA fiasco) and their officials. Meanwhile, well done to the IPAA and the Delhi High Court!
Note: This blog post was co-authored by Shamnad Sir and myself.