Guest Post: The Equitable Dimension: Full Bench on Registration Invalidity Pleas in Trade Mark Infringement Suits

spicyfellowship2A couple of years ago, the Bombay High Court, in Lupin Ltd vs Johnson & Johnson, referred to a Full Bench, the question of whether at the interim stage, courts are allowed to examine the validity of a trademark. Near the end of December, 2014, the Full Bench resolved this query and we’re happy to bring you a guest post by Aabhas Kshetarpal examining this decision. While reflecting on this decision, he also opines that it potentially suffers from certain legal infirmities. This is Aabhas’ third post in our SpicyIP Fellowship applicant series. You can view his earlier posts here (Seeking Clearance under Section 39 of the Patents Act? Think Again!) and here (Google Books in the Clear: The Appeal Process a Mere Formality?). [Readers interested in finding out more details about our SpicyIP Fellowship applicant series can click here.]

The Equitable Dimension: Full Bench on Registration Invalidity Pleas in Trade Mark Infringement Suits

By: Aabhas Kshetarpal

In August 2012, a Single Judge of the Bombay High Court, made a reference to the Full Bench of the Court on a question which has a heavy bearing on trade mark injunction litigation in India (see detailed post on the reference by Aparajita Lath). The question of reference was as follows:

“Whether the Court can go into the question of the validity of the registration of the plaintiff’s trade mark at an interlocutory stage when the defendant takes up the defence of invalidity of the registration of the plaintiff’s trade mark in an infringement suit?”

Finally, on 23rd of December, 2014, the said Bench decided the matter resolving, inter alia, the conflict between two Division Benches of the High Court. This post will reflect upon the law laid down by the Court and its, sure to be felt, impact.

In this rather elaborate, but well-structured judgement, the Full Bench finally held that Civil Courts are entitled to delve into the question of the validity of the trade mark and deny the grant of an injunction if it is shown that the registration of the trademark is “ex facie illegal, fraudulent or shocks the conscience of the Court”.

The Bench considered a plethora of explanations to arrive at the said reasoning. However, the judgement hinges on two phrases, “if valid” and “prima facie”, used in Sections 28 and 31 of the Trade Marks Act.

The Court held that Section 28, which enumerates the rights conferred by registration, makes the exclusive right to the use of the trade mark subject to the trade mark being valid. Further, the Court, while considering Section 31, which provides that the registration will be the prima facie evidence of the validity, stressed on the phrase “prima facie” and observed that it was adequate to determine the legislative intention of giving the Civil Court the power to consider the validity of the trade mark in exceptional cases.

However, the Court failed to appreciate that, in the 1999 Act, as opposed to the 1958 Act, the power of rectification has been conferred on the Registrar of Trade Marks and the IPAB. The Registrar of the High Court has thereby been replaced by the IPAB in matters of rectification in the 1999 Act, making the jurisprudence on the 1958 Act irrelevant. This can be noticed from the apparent difference between Section 56 of the 1958 Act and Section 57 of the 1999 Act.

Further, Section 124 of the 1999 Act provides that where a challenge to the validity of the plaintiff’s trade mark is raised in a suit for infringement before a Civil Court and the same finds the said challenge as prima facie tenable, the said Court will raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the defendant to apply to the Appellate Board for rectification of the register.

Another fact, as pointed out by the plaintiff, is that there appears to be a specific legislative intent precluding the Civil Court from going into the validity of the trade mark. As opposed to the 1999 Act, the Designs Act, in Section 22(4) read with Section 19, and the Patents Act, in Section 10 read with Section 64, contain express provisions allowing claims for invalidity in suits for infringement.

I believe that these provisions make it adequately clear that the Civil Court’s power to adjudicate on the validity of the trade mark has been taken away. The proper course of action has been laid down in Section 124. Consequently, any adjudication on the validity of the trademark would be a transgression of judicial limits and would go against the language of the statute.

With regard to Sections 28 and 31, in all humility, it seems that the Court is trying to force a presumptive reading of the provisions. The phrase “if valid” in Section 28 seems to refer to the enforceability of the trade mark in view of other provisions of the act and the laws in force in India. The reading adopted by the Bench would enable to Civil Court to go into the merits of a trade mark registration at any instance. The qualification of ex-facie illegality, which is a restraint the Court has imposed on itself, would also not be necessary. Section 31, on the other hand, lays down the general presumption of validity and should not be read in the context of suits for interim injections where the invalidity plea is raised.

However, the approach taken by the Court is underlined by an equitable dimension. This approach, notwithstanding its potential legal infirmities, would give an aggrieved party the right to use their own trade mark even in case it has been somehow registered by another concern. As per the alternate approach, the Court would have to grant an injunction and wait for the IPAB to decide on the validity of the trade mark, thereby causing detriment to an innocent party. In other words, the Court has insured trade mark holders against potential mistakes by the Registrar.

Regardless of the opinion you subscribe to, there can little doubt about the fact that this decision will, in view of heavy trade mark injunction litigation in India, cause quite some waves in the near future.

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