Gazing at Substantive vs Procedural Rights in the Light of SAP Se vs Swiss Auto Products and Anr

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[This post is authored by SpicyIP Intern Varsha Sharma. Varsha is a 5th year law student pursuing B. A. LL.B (Hons.) from Jindal Global Law School, Sonipat.]

In this post, I will be dwelling on the aspect of vested substantive rights encompassed within procedural rules, from the perspective of the recent controversy raised in SAP Se vs Swiss Auto Products and Anr. The case revolved around SAP Se (Appellant) trying to furnish new evidence according to the Trademark Rules, 2002. The Appellant was a software entity providing business solutions for a number of industries. It started trading in India in around 1992 under the mark “SAP” and applied for trademark registration in 1999. However, the application was opposed by Swiss Auto Products (Respondent) in 2007, and the Appellant received the notice of opposition on 24 October, 2011. Against this opposition, the Appellant filed a counterstatement on 21 December 2011, which was then forwarded to the Respondent in July 2013. On 19 October 2013 the Respondent submitted an affidavit of evidence in support of the opposition, the complete set of which was received by the Appellant on 12 November 2013 after a round of to and fro communication regarding the missing annexures. Thereafter the Appellant requested extensions to file their evidence and on 09 May 2014 they filed for an Interlocutory Petition (IP), accompanied by affidavits in support of their application. However, the IP was rejected by the Registrar vide the impugned order dated 12 June 2019, due to delay in the filing of evidence.

Relevant Provisions Under Consideration: The Conflict Between the 2002 and the 2017 Rules

Even though the tiff between the parties revolved around whether Rule 51 of the Trademark Rules, 2002, (dealing with the filing of evidence), was mandatory or directory in nature, the court did not dive deep into a discussion of the same. Instead, the court assessed whether the Registrar should have applied the 2002 Rules or the 2017 Rules, while passing the impugned order in 2019.

Comparing both the Rules, we can see that:-

(a) Rule 46(1) of the 2017 Rules which was analogous to Rule 51 of the 2002 Rules does not provide for an extension for the filing of evidence;

(b) Rule 46(2) of the 2017 Rules provides that not following the timeline for filing of evidence as stipulated under Rule 46(1) could result in an abandonment of the application.

Additionally, there is a saving clause, under Rule 158 of the 2017 rules, which states that “the Trade Marks Rules, 2002, are hereby repealed without prejudice to anything done under such rules before the coming into force of these rules.”

Observations of the Delhi High Court

According to the Delhi High Court’s analysis, the repeal clause (Rule 158) resulted in the 2002 Rules being repealed in its entirety by the 2017 Rules. After discussing various Supreme Court rulings on the issue of retrospectivity, the court referred the following questions to the higher bench: 

(i)Whether the rules which are related to the procedural aspect such as the filing of evidence, which had been introduced by the coming of the Trademark Rules, 2017 would also apply retrospectively to the proceedings which had been initiated under the Trademark Rules of 2002.

(ii) Whether not filing of evidence supporting the trademark application would be covered under the expression, “anything done under the Trademark Rules, 2002, which is saved by the Rule 158 of the Trademark Rules, 2017, and would still be governed by the Trademark Rules, 2002.

Court’s Disagreement with Mahesh Gupta vs Registrar of Trademarks & Anr

In the present case, the court disagreed with the decision of a coordinate bench in Mahesh Gupta vs Registrar of Trademarks & Anr., wherein the Court had held that the 2002 Rules would continue to adjudicate the proceedings initiated under the 2002 Rules.

However, the court in the present case interpreted the saving clause under 2017 Rules to mean that (only) actions taken, decisions made and rights granted under the 2002 Rules would be valid and will not be affected by the repeal. The court thus divided the events of the case into 2 parts- first, filing the application and the evidence; and second, the decision taken by the Registrar. The court held that filing of the trademark application and submitting the relevant evidence was done under the 2002 Rules, but the decision of rejecting the additional evidence was taken as per the 2017 Rules.

However, I believe that the reasoning of the Mahesh Gupta case was right on two prongs- firstly, the right to file evidence would essentially affect the vested substantial right of an individual (b) secondly, all the proceedings had been initiated when the 2002 rules were in force, which included filing of counter-statement, application of condonation of delay, etc.

Procedural Rights vs Substantive Rights

The Delhi High Court’s reasoning for arguing in favour of a retrospective application of the 2017 Rules was centered around the fact that the filing of evidence in support of the application is per se a procedural law and not a substantive one. For this, the court relied on a catena of judgments by the Supreme Court, such as SEBI vs Classic Credit, Thirumalai Chemicals vs Union of India, where it is held that procedural amendments are presumed to have retrospective efficacy unless declared otherwise.

However, the essential question is if the cause of action accrued earlier and a party had acted upon the procedural aspects then won’t denying them those procedural rights in light of the new Rules, result in a denial of procedural justice and fairness? Why do the procedural rules have to be looked at from the viewpoint of being a channel to the fulfillment of substantive rights?

Another reasonable apprehension regarding strict bifurcation of procedural and substantive rights is that it is very much possible that even though an act might appear to be prima facie procedural, it is very much capable of depriving an individual person of his substantive rights

Intertwined Nature of Procedural and Substantive Laws:  Vested Substantive Rights in Procedural Law

A literal reading of the procedural and the substantive laws might sometimes result in unjust results, depriving individuals of his rights. Therefore, the Supreme Court in a number of cases have given recognition to the principle of ‘vested substantive rights in procedural law’. For instance, in the case of Videocon International Ltd. v. Securities and Exchange Board of India, the court had held that the vested substantive right of an individual would include what was there at the initial stage of the dispute, and, that a vested substantive right can be availed of, irrespective of the law which prevails at the date when the impugned order is passed or law is availed. Similarly, in the case of Commissioner of Income Tax, Orissa vs Dhadi Sahu, the court had held that even though a litigant does not have a vested right in the procedural law, but where the question involved is that of a change in the forum, it is not only a question of procedure, thereby recognizing the aspects of substantive rights within the procedural rights.

In the present case, the substantive rights which could be negatively impacted by the application of the 2017 Rules is that of the applicant’s right to seek registration over the mark SAP. There was a clear intention on the applicant’s part to continue with the prosecution, which is also evident from the fact that the Appellant not only sought multiple extensions but also filed an interlocutory petition accompanied by the affidavits, as constituting the evidence in support of the application in 2014. However, the order rejected the Appellant’s petition, which was passed after around 5 years after the filing of evidence, and around 2 years after the 2017 Rules came into effect. Therefore, if we go by the court’s logic and judge the actions which were taken under the light of 2002 Rules, from the amended 2017 Rules, we can see that instead of the IP being rejected, the applicant’s whole application can be ‘deemed abandoned’ under Rules 46(2). It is also pertinent to note here that the authority took five years to decide on the petition during which the 2017 Rules had come into effect.

The Supreme Court in Hitendra Vishnu Thakur v. State of Maharashtra has cautioned against retrospective application of procedural laws when it results in situations such as above. The court has specifically noted that “a procedural Statute should not generally speaking be applied retrospectively, where the result would be to create new disabilities or obligations, or to impose new duties in respect of transactions already accomplished.”

Another ancillary point here is that Regulation 51 of the 2002 Rules, did provide a discretionary power to the Registrar to allow for an extension in the filing of evidence by the Applicant, however, no such discretion is available under the 2017 Rules, which again could have an adverse impact on the Appellant’s rights.

Why the 2017 Rules Should Not Be Applicable?

I think the court’s decision should rest upon a reading of the 2002 rules because of the following reasons: (i) none of the parties had argued with respect to the non- applicability of the 2002 rules (ii) most of the proceedings had already been conducted according to the 2002 rules (iii) there had been a delay on the part of the respondent himself in filing of the evidence, due to which the Appellant had to request for an extension (iv)Most importantly, the application of the 2017 Rules could result in the Appellant’s application status being considered as ‘deemed abandoned’, imposing “new disabilities” on the Appellant.

Therefore, considering the difference in impact of the 2002 and the 2017 Rules, hopefully, the division bench will take a cautious and reasoned approach and end the controversy for good.

[Note: The matter was listed before the DB on the 8th, but the copy of the order is not available on the DHC website. In case any of our readers have access to the court’s order, please feel free to share it.]

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