Last month, in a landmark development, Exide Industries (Exide India) entered into a settlement with US based Exide Technologies (Exide US) over the use of the disputed ‘EXIDE’ trademark. I call it a landmark development for two reasons – a) it is a decision that has put an end to a dispute, which has gone on for almost two decades and b) according to media reports, the terms of the settlement indicate that Exide US has effectively waived any right/ claim to ownership of the ‘Exide’ trademark in India. This waiver is subject to conditions (that are not quite clear at the moment) and, I suspect, a good amount of consideration!
The beginning of the dispute goes all the way back to 2012 when Exide took Exide US to court over infringement of their Exide trademark. The Court, through Justice Valmiki Mehta, restrained Exide US from using the Exide mark in India. This order came after 15 years after the suit was first filed in 1997. The Court confirmed both passing off and infringement of the Exide TM by Exide US. Among several things, the substantive part of the decision included J. Valmiki’s recognition of Exide India as prior user since customers in India would associate the product and mark only with Exide India and its predecessors. We had covered this order over here. The post traces the unique factual matrix of the case and notes, among other things, how the Court ruled in favour of the Indian company – by holding that Exide US should have protected its trademark more fiercely. The defendants had pleaded “special circumstances” to justify non-use of the mark during which period Exide India started using their mark. The court observed that Exide US had failed to establish any “special circumstances”. The post concludes by juxtaposing the decision with two things: concurrent, genuine use of the mark by an international proprietor, and effects of trans-border reputation. The author also hoped for appeal of the decision, so that we could all be blessed with clarity of law in this regard.
Call it coincidence or the universe playing (jurisprudential) genie – this case came up in appeal before the Division Bench of the Delhi HC, in August last year. The order is accessible here. The Bench, dwelling upon the same facts considered some broad issues. I have reproduced the relevant issues below:
- Whether Exide India is the lawful registered proprietor of the trademark ‘EXIDE’ in India?
- Whether the first defendant/Exide US is prior user of the mark ‘EXIDE’ in India?
- Whether use of the mark ‘EXIDE’ by Exide US amounts to infringement/passing off?
- Whether Exide India’s use of ‘EXIDE’ amounts to passing off? (i.e. the counterclaim)
Considering the first issue, the Division Bench confirmed the opinion of J. Valmiki that the civil court had no jurisdiction to decide the validity of registration of the mark. This was in view of section 111 of the old trademarks act (replaced by section 124 of the new act). This section provides for a possibility of adjournment of suit proceedings in case of an application challenging the validity of the trademark. However, this did not allow a court moved for infringement of trademark, to go into validity of registration. This determination was restricted to the jurisdiction of the IPAB. The Bench, thus settled the issue on the conclusion that it must proceed with the assumption that the registration of the Exide TM in favour of Exide India, was valid.
Proceeding on that assumption, the Bench then considered the next three issues together – i.e. whose use of the mark can qualify as “prior use” and whether Exide US or Exide India is liable for passing off/infringement of the mark. The Court, first noted the difference between passing off and infringement. It relied on landmark Supreme Court decisions like Cadila Healthcare, Dyechem v. Cadbury and Lakshmikant v. Chetanbhai to do so. While a claim of passing off may be defended on account of the “added matter” to a mark, a claim of infringement has no such defense. Further, infringement is largely influenced by the essential features test. If the essential features of the registered mark are copied, leading to an impression of deception/confusion or mistake in the minds of the people dealing with the mark, it can be said to be infringed.
Applying these principles to the case at hand, the Court observed that the Exide mark used by both the parties are identical. The question, then, was – who had infringed/passed off the mark. In answer to this, the Bench concluded that both were genuine users and were to be allowed to continue using the mark. It did this rather creatively, as is summarized below:
The factual matrix: It outlined the facts underlining the ownership, registration and use of the Exide mark in India. It pointed out that the mark was coined by Exide US’s predecessor. The mark was used and traded jointly by Exide US and ‘Chloride’ (a UK based company – in which Exide US held majority shares). Consequently, Exide US had to give up some of the shareholding in view of competition constraints. In terms of the Indian market, Exide US was also kept out of it due to the Harvey Agreement, which had resulted in a trade embargo. However, before this, goods bearing the mark were traded and marketed through Chloride Group & a common distributor. The court also perused the evidence on record to conclude that the Exide Batteries (manufactured by Exide US) was known substantially in India.
Retention of goodwill & transnational reputation: The Court then noted that through an assignment deed, the mark was assigned to Exide India. However, placing reliance on several foreign cases, it opined that although the rights in the mark were assigned, the goodwill in the mark was retained by Exide US. This was because the agreement did not expressly transfer goodwill along with the transfer of rights in the mark.
In determination of this issue, thus, the Court highlighted transnational reputation. Applying dicta such as the Whirlpool case to the facts of this case, the court opined that an enterprise need not exist in a particular territory to have goodwill within it. Further, giving the case a unique dimension, it allowed Exide US to be in possession of goodwill in the Exide TM despite valid assignment of the mark to Exide India. It relied upon the British judgment of Scandecor to establish that it is possible for an enterprise to retain its goodwill. Another related observation was that internationally acquired goodwill may coexist with locally acquired goodwill. Thus, Exide US was held to have a bonafide claim to the use of the Exide TM.
Bonafide, concurrent use & non infringement: Finally, the court confirmed that there had been no infringement or passing off by Exide US as it had valid rights to the mark. Further, the counterclaim against Exide India was not maintainable since they were the registered owners of the mark. To quote the Bench:
“This Court, therefore, holds that Exide US did not infringe the mark, or attempt to pass off a mark over which they had no right. Their use of the word Exide was, in the circumstances both bona fide and legitimately concurrent. Furthermore they had, by reason of the transnational reputation pleaded and proved, right to use it in India…The suit for infringement and passing off has to fail. Since the material on record shows that the plaintiffs are registered owners of the mark, the counter claim cannot succeed.”
Through this decision, the division bench effectively restored rights to the mark to both the competing proprietors.
The order brought to the fore several debatable points – the true scope and effect of concurrent use of an identical trademark for similar products (in view of the unique facts of the case), and validity of the determination that goodwill can be retained even post an assignment deed. Further, allowing such retained goodwill coupled with prior commercial use, to evidence bona fide claim to the mark was a unique approach.
This order had been stayed by the Supreme Court in appeal, after being moved by Exide India. The apex court also restrained Exide US from using the mark until final adjudication of the matter. According to reports and the SC website, the matter is still pending. If anything, the settlement is likely to mark the end of an era of trademark litigation that had managed to chalk out areas of rather promising jurisprudence.
Image from here.
A very good case law on use of trademark and good faith