Section number ‘124’ seems to the most trending section number this month in India – from passionate debates over the highly controversial section 124A of the Indian Penal Code splashed all over the news, we have for our readers a slightly more tedious debate over section 124 of the Trade Marks Act, 1999.
A full bench of the Delhi High Court in Data Infosys v. Infosys Technologies held that prior permission of the Court is not necessary under Section 124(1)(b)(ii) of the TMA for filing a rectification petition before the IPAB during the pendency of an infringement suit. Therefore, both the on-going infringement suit as well as the subsequent rectification proceedings can proceed simultaneous.
As per the general scheme of TMA, the jurisdiction and powers of the Civil Courts and the Registrar/IPAB are different and not concurrent. While the Registrar/IPAB is conferred with exclusive powers over the registration and rectification/cancellation of trademarks, the Civil Courts are only empowered to try cases of infringement and/or passing off. In this regard, the TMA is different from the Patents Act, 1970 which confers concurrent and coordinate jurisdiction between Civil Courts and the IPAB.
The factual matrix of the case –contextualizes the question at issue –
- The Plaintiff (respondent) – Infosys Technologies Ltd. sued Data Infosys (defendant) before the Delhi HC for trademark infringement of its registered trademark “Infosys”.
- During the pendency of the suit, the defendant’s trademark application for its mark “Data Infosys” was registered.
- Thereafter, the plaintiff filed rectification proceedings before the IPAB with respect to the defendant’s registered trademarks – Data Infosys, without prior permission of the court.
The defendant challenged the filing of the rectification proceeding stating that the plaintiff filed the above application without leave of the Court as required under Section 124 of the TMA and therefore such an application is void and not maintainable.
Issue – Whether prior permission of the Court is necessary under Section 124(1)(b)(ii) of the TMA for filing a rectification application before the IPAB after an infringement suit has been filed and is pending before the Court?
In order to examine the rival contentions and the court’s decision, it is beneficial to reproduce Section 124 –
- Stay of proceedings where the validity of registration of the trade mark is questioned, etc.—
(1) Where in any suit for infringement of a trade mark—
(a) the defendant pleads that registration of the plaintiff’s trade mark is invalid; or
(b) the defendant raises a defence under clause (e) of sub-section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant’s trade mark, the court trying the suit (hereinafter referred to as the court), shall,—
(i) if any proceedings for rectification of the register in relation to the plaintiff’s or defendant’s trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings;
(ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff’s or defendant’s trade mark is prima facie tenable, 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 party concerned to apply to the Appellate Board for rectification of the register.
(2) If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub-section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings.
(3) If no such application as aforesaid has been made within the time so specified or within such extended time as the court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case.
(4) The final order made in any rectification proceedings referred to in sub-section (1) or sub-section (2) shall be binding upon the parties and the court shall dispose of the suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark.
(5) The stay of a suit for the infringement of a trade mark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction directing account to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit.
Defendant’s arguments –
The Defendant argued that permission under Section 124 (1)(b)(ii) is a condition precedent and mandatory. If rectification proceedings are filed without obtaining such permission, such proceedings would not be maintainable. This view was taken in Astrazeneca UK Ltd. V. Orchid Chemicals and Pharmaceuticals Ltd., 2006 (32) PTC 733 (Del) and affirmed by the Division Bench in United Biotech Pvt. Ltd. v. Orchid Chemicals and Pharmaceuticals Ltd., 2012 950) PTC 433 (Del)(DB).
As also explained by the intervener Ms. Pratibha Singh, prior permission of the court, in a pending infringement suit was a precondition and there were several reasons for the same. First, on a textual interpretation of the scheme of the TMA, it was evident that Sections 47 and 57 are general provisions that give exclusive power to the IPAB in matters regarding rectification/removal of a trademark. The IPAB being an independent and autonomous body was therefore generally governed by these provisions. However, section 124 created a special situation i.e. where a suit for trademark infringement has been filed before a Civil Court, in such a situation – the IPAB’s power to try a case regarding rectification is subjected to the prior permission of the Court. Therefore, it was argued that section 124 being a special section must prevail over the general sections. Secondly, on a purposive interpretation, such an interpretation was required to avoid conflicting decisions as to the validity of the trademarks and to ensure that litigants do not frustrate infringement proceedings.
However, the court did not accept this line of argument. The court favoured the view taken by the plaintiff i.e. permission from the Civil Court trying an infringement suit is not a condition precedent to file a subsequent rectification application, under Section 124.
The court held that unlike the old 1958 Act where the High Court had exclusive jurisdiction to try issues with regard to trademark validity, the 1999 Act has conferred exclusive jurisdiction in this regard only to the IPAB. Therefore, the court held that as per section 124, the Court’s jurisdiction extends only to examining whether a prima facie case for invalidity exists only for the limited purpose of granting an adjournment/stay.
The courtalso held that the jurisdiction of the IPAB is no way conditional upon the Court’s determination of a prima facie case and nothing precludes a party from moving rectification proceedings before or after filing of the suit. This was because the IPAB is vested with the exclusive jurisdiction to examine the validity of registered trademarks and the IPAB’s jurisdiction cannot be ousted or subordinated to that of the civil court. Therefore, the AstraZeneca line of cases is overruled and instead the court follows the approach taken by the Madras High Court in B. Mohamed Yousuff v. Prabha Singh Jaswant Singh and Ors. 2008 (38) PTC 576 (Mad) (DB)
The majority observes that in a case where a rectification petition is pending before filing of suit, the Court has no choice but to stay the suit (Section 124(1)(a)(ii)). In this case, the stay is automatic. However, when no such rectification application is pending, and rectification proceedings are filed later (as had happened in the present case), the stay is not automatic but is at the discretion of the Court. In ordering this stay, the Court has to examine whether a prima facie case has been set up with respect to invalidity. If such a finding is come to, the court can order a stay/adjournment till the IPAB decides the rectification application.
However, if the court does not come to a prima facie finding or the party seeking rectification does not duly file such an application with the prescribed time, the majority notes that the only consequences are – 1. The party loses the right to argue that the suit is to be stayed and 2. The plea of invalidity would be deemed to be abandoned in the suit. Therefore, even if the plaintiff/defendant files a rectification application, the final decision of the IPAB would have no bearing on the suit, in view of the deemed abandonment and would also not result in a stay of the suit. Moreover, as per section 124(3), once this issue is abandoned the court will not decide this issue since the exclusive jurisdiction in this respect vests with the Registrar/IPAB.