Interpreting Invalidity under Section 124 of the Trade Marks Act

We are pleased to bring to you a guest by Arun Mohan on the recent decision of Supreme Court in Patel Field Marshall v. P.M. Diesel, which we had covered here. Arun is a graduate of the London School of Economics and has experience in working on intellectual property and commercial matters, in India and internationally. He has worked on various prominent IP disputes including appearing for Rajinikanth in the recent landmark decision on celebrity rights, in the TVS v. Bajaj patent dispute and against Google in the ongoing litigation on the use of third party trademarks in its Adword program. He also regularly appears before the Intellectual Property Appellate Board and Competition Commission. He is a guest lecturer at NALSAR focusing on intellectual property litigation and a consulting editor of the Manupatra Intellectual Property Reports (MIPR). He also regularly appears regularly in several arbitration forums with an emphasis on energy and infrastructure. He has authored a number of guest posts for us in the past, the most recent of which can be viewed herehere and here.

Interpreting Invalidity under Section 124 of the Trade Marks Act

Arun Mohan

There has been a lot of discussion amongst the Bar as to the consequences of the recent decision of the Hon’ble Supreme Court in Patel Field Marshall. At the outset, I find that the order only clarifies the present position in law, and does not upset the present state of trademark jurisprudence as has been understood by many lawyers. The procedural consequences however, maybe many, especially given the recent resurgence of the IPAB.

The decision interprets Sec 111 of the Trade and Merchandise Marks Act, 1958 (‘1958 Act’) which is pari materia to Sec 124 of the Trade Marks Act, 1999 (‘1999 Act’). The issue particularly considered is of the consequences under Sec 111(3) of the 1958 Act, when there is no issue on validity framed or in the situation wherein the Trial Court allowed the party to pursue rectification, and such party fails to do so.

At the outset, the Hon’ble Apex Court unequivocally confirms that the issue of validity of a trademark is to be decided only by the High Court (under the 1958 Act) or the IPAB (under the 1999 Act). This finding, which explicitly precludes the Trial Court, would serve to substantially strengthen the ambit of Sec 31 of the 1999 Act, which has been the subject of considerable discussion till date.

The scope of the discussion is to be understood in the context of Sec 111(3) of the 1958 Act. The order is very clear, that in the event of there being no civil lis between the parties, the parties have an independent right to seek rectification. The position considered is when there is a civil suit relating to infringement, wherein the validity of the mark is raised as a defense. In such a scenario, when the parties are before the Trial Court for framing of issues, the following are the possible consequences:

  1. Firstly, when neither party seeks to have an issue framed on invalidity and the suit is disposed off, then the issue of validity and rectification cannot be raised thereafter as it would lead to the finality of the decree being perpetually in doubt. 
  1. Secondly, when there is a civil suit instituted after or in parallel to the rectification proceedings, there is a requirement to get a finding from the Trial Court as to the prima facie tenability of the plea invalidity prior to the IPAB/Tribunal taking up the rectification. In coming to the said conclusion, the order is quite categorical that the conclusion as to the validity is to be decided only by the IPAB/Tribunal. Therefore, the logical corollary would be that the finding of the Civil Court being only a prima facie one, would not be binding or even persuasive on the IPAB/Tribunal exercising its independent jurisdiction.

In the event the Trial Court is not convinced on the tenability of the invalidity claim, the only recourse to an aggrieved person would be to take such order on civil appeal. In such circumstances, the aggrieved person cannot seek rectification independently.

In my opinion, the position in both these scenarios does not deviate substantially from the present law. The order infact gives life to the requirement of the finding of tenability by the Trial Court, which has been swept under the carpet in many proceedings under the presumption that a rectification proceeding can be filed as matter of right. The interpretation of the legislative intent in the order to ensure finality and prevent contradictory legal proceedings is remarkable in its lucidity.

The grey area in the order, is the situation (extensively prevailing) wherein both rectification proceedings and civil suits are already pending in respect of the same dispute, and no finding from civil suits is available in this scenario. If the judgement is giving a strict reading, none of these rectifications can proceed without the finding of the civil court. However, in cases where the civil suit is stayed, there shall be no doubt as it ought to be assumed that the Trial Court has applied its mind for the same and referred the matter to the IPAB or Tribunal. In cases where they are pending in parallel, Trial Courts will have to come up to speed to decide if the suits ought to be stayed and frame issues accordingly or find that the plea of invalidity is untenable. Given the recent notification of the Commercial Courts Act 2015 across various courts, this may not be as difficult a challenge as it appears.

A further and murkier shade of grey is in the scenario, when there are civil suits pending and in related proceedings orders of the IPAB are challenged before the High Court vide writ petitions. Given the requirement of conformity to the finding of the IPAB/Tribunal, if the Trial Court adopts the IPAB finding and decrees accordingly, it would again be reopened if a different conclusion is found on appeal against the IPAB order. Logically, the approach would be to wait for such appeal to be disposed off, but given our penchant for pendency this would mean that the pendency of suits may infact go up. The possibility of challenge to any IPAB/Tribunal orders has not been considered in this recent order, and that would be a battle for a different day.

Despite this, in my reading of the matter, the order stands on solid footing in requiring there to be a purposive reading of Sec 111 of the 1958 Act and Sec 124 of the 1999 Act, thereby ensuring that the staying of suits is not a mere formality and frivolous claims are not placed before the IPAB only to protract proceedings. The only apprehension I have is the primacy attached to interim proceedings would be greatly enhanced, as the prima facie finding therein would definitely influence the probability of challenging the impugned trademark. If the court, for instance, grants an interim injunction on a prima facie basis, the chances of the defendant convincing the court that she has a valid basis to seek invalidation of the plaintiff’s trademark is rather bleak. The balancing of interests will be a delicate and unenviable task before our courts in the immediate future.

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