In the Aftermath of Parle: Unsettling Questions for Trade Mark Law

What happens when trademark law privileges filing priority over marketplace reality? The Delhi High Court’s April 10 ruling in the ‘20-20’ dispute raises difficult questions about whether registration can meaningfully coexist with decade-old goodwill, and whether identical marks can survive in the market outside the framework of honest and concurrent use. In this post, Eleen Garg examines the structural tensions the decision leaves unresolved between registry formalism, consumer protection, and passing off. Eleen is a lawyer and is practicing before the Hon’ble Delhi High Court. He holds a Master’s Degree in Commercial Law from the University of Cambridge. The views expressed here are of the author’s alone.  

In the Aftermath of Parle: Unsettling Questions for Trade Mark Law

By Eleen Garg

The Delhi High Court’s ruling in Parle Products Pvt. Ltd. v Registrar of Trade Marks and Anr., which accords primacy to the date of application over subsequent use and accrued goodwill, raises difficult questions at the heart of Trade Mark Law. The decision foregrounds tensions between filing priority and market reality, coexistence of identical marks outside the scope of honest and concurrent use, and the uneasy survival of passing off claims despite registration. This post examines these issues and argues that while the judgement resolves registration dispute, it leaves unresolved the consumer protection concerns that would arise when identical marks collide in the market.

Brief Facts of the Case

The 19-year-old dispute arose from the Registrar’s rejection of Parle’s opposition to Avon’s application to register the mark ‘20-20’. Avon filed its application on 27 September 2007, one week before Parle’s application dated 4 October 2007. Both parties sought to register the identical word mark ‘20-20’ in Class 30 covering food products including biscuits, confectionery, flour-based preparations, tea/coffee, and spices on a ‘proposed to be used’ basis.

During the examination of Parle’s application, objections were raised under Section 11  of the Trade Marks Act, 1999 (“Act”) on relative grounds for refusal. Avon’s earlier identical mark was cited as giving rise to likelihood of confusion and risk of association. Parle submitted that the marks were dissimilar and restricted the scope of its application to biscuits only. However, Parle’s mark was registered on 1 November 2017 for all the goods for which Parle had initially applied.

Avon’s application was initially refused on 15 March 2010 on absolute grounds of refusal under Section 9(1)(b) holding that the mark has a direct reference to character and quality of goods. After numerous reminders, and an intervention by the Delhi High Court in this matter, finally the Refusal Order was communicated to Avon on 1 March 2016. Avon challenged the Refusal Order, which was set aside by the IPAB on 9 August 2019 on the grounds that Avon’s mark is arbitrary and bore no direct relation to the character or quality of the goods.  

The mark was subsequently accepted by the Registry and advertised on 10 August 2020, prompting Parle’s opposition.

The Registry dismissed Parle’s opposition, holding that Avon, by virtue of its earlier filing date, was the prior adopter and applicant, and therefore enjoyed superior rights. Parle also raised passing off objections which the Registry did not expressly address, confining its reasoning to filing priority. Avon’s mark was accordingly permitted to proceed to registration.

Parle, in the Appeal before the High Court, argued that it had used the mark for over a decade, acquiring substantial goodwill, whereas Avon had not yet commenced use. Parle relied on Neon Laboratories Ltd. v. Medical Technologies Ltd. and S. Syed Mohideen v. P. Sulochana Bai and argued that the ‘first in the market’ test under Section 34 of the Act ought to apply. Under this test, priority is accorded to the party that first entered the market, notwithstanding the other party’s registration.

Court’s Reasoning

The Court rejected Parle’s submissions, holding that Avon, by virtue of its earlier filing date, was the senior adopter. It also noted the inconsistency in Parle’s stand, observing that while Parle had earlier stated during prosecution that the marks were dissimilar, it subsequently opposed Avon’s mark on the ground of similarity. The Court held that such approbating and reprobating was impermissible in law. (More on the principle here and here) It clarified that Neon Laboratories and S. Syed Mohideen are relevant in passing off actions, which were inapplicable here as Avon had not commenced use.

The Court, in applying Section 18 of the Act, which lays down the procedure for making of an application for registration, held that where competing applications are filed on a proposed to be used basis, subsequent use by one party does not affect priority for registration. Court relied on Mohan Goldwater Breweries Pvt. Ltd. v. Khoday Breweries Ltd. (Appeal against Order Nos. 456 and 457 of 1974 [Note: Despite best efforts, I wasn’t able to locate an openly accessible copy of the judgement) and Master Enterprises (P) Ltd. v. Jay Kay Coir Foam (P) Ltd. to conclude that for registration, a senior adopter prevails, thus, rendering Parle’s prior use inconsequential.

Parle’s opposition was accordingly rejected, and Avon’s mark was allowed to proceed to registration.

This reasoning raises structural concerns. It elevates Section 18 over goodwill, permits the coexistence of identical marks outside the framework of honest and concurrent use. While Trade mark law recognises that infringement and passing off operate through different doctrinal lenses, this case poses a more complex problem. A right secured through registration may, upon actual use, remain susceptible to restraint through a passing-off action. These tensions are examined in turn.

Filing Without Protection: The Section 18 Gap

Section 18(1) permits an application to be filed on a ‘proposed to be used’ basis. What it does not contemplate, however, is the lacunae that follows between filing and registration, particularly where the applicant has not commenced use. The Court treats intention to use and filing of application as sufficient to anchor priority for registration, but it does not address the absence of enforceable rights during this interregnum.

In the present case, that interregnum stretched over a decade. During this period, Parle entered the market, registered and used the mark ‘20-20’, and built significant goodwill. Whether Avon was aware of such use is unclear. However, the more pressing question is this: even if it was, what could Avon have done? Until the High Court allowed registration of Avon’s mark, it had neither statutory rights (no registration) nor common law rights (no use). It could not sue for infringement, nor sustain a passing off claim. In effect, it had priority without protection.

This reveals a structural gap. The statutory scheme does not equip an applicant with any legal remedy to monitor the market while awaiting registration. The applicant is left with a choice to either remain commercially inactive and preserve its filing priority, or commence use and risk collision with existing or subsequent users. While registration strengthens Avon’s position in the market as it would deter later entrants and enable infringement actions against third parties, it does little to resolve conflicts with prior users who may restrain such use through passing off. In either case, the law offers no meaningful mechanism to harmonise filing priority with market reality.

Against this backdrop, the Court’s approach raises a deeper concern. If mere intention to use is evidenced only by filing, and is elevated above decade-old goodwill, when and how does such intention crystallise into enforceable rights before registration? Section 18 provides no answer. By privileging filing, the decision effectively detaches trademark priority from commercial reality.

Certainly Avon’s filing priority ought not to be prejudiced by delays attributable to the Registry. However, the difficulty lies not in protecting Avon’s filing priority but doing so at the cost of disregarding Parle’s substantial goodwill.  By privileging filing in this manner, the decision reduces trade mark priority to a matter of procedural happenstance, severed from the commercial reality it is meant to reflect.

The implication is significant. Avon, is now entitled to enter the market for identical goods having identical marks owned by Parle which has built substantial goodwill in the same mark over a decade. This exposes a systemic vacuum at the heart of Section 18. Critically, a deeper analysis is warranted pertaining to subsequent legal recognition of identical marks for identical goods irrespective of their inevitable collision in the market. The consequences of such coexistence are examined next.

Co-existence of Identical Trade Marks beyond Honest and Concurrent Use

Section 2(1)(zb) of the Act states that a trade mark “must be capable of distinguishing the goods or services of one person from other.” The Delhi High Court in Hindustan Pencils held that the distinguishing capability of a trade mark is “primarily, probably solely for the benefit of the consumer.” The Court further underscored its concern for unwary consumers, particularly in third world countries. It observed that, “It is no doubt true that giving protection to the consumer would necessarily amount giving relief to the Plaintiff, even though Plaintiff may have slept over his right for a number of years.”

The emphasis, therefore, is on public interest, with consumer protection taking precedence even where the plaintiff’s conduct is not diligent. In the present case, however, this logic is conspicuously absent. Consumers have come to associate the mark ‘20-20’ with Parle through over a decade of use. Yet, despite these commercial realities, the statutory framework permits the coexistence of identical marks. It leaves consumers exposed to inevitable confusion, which the trade mark law primarily strives to prevent.

Ordinarily, such coexistence is contemplated under Section 12 of the Act in cases of honest and concurrent use. Section 12 permits registration of identical or similar trade marks by more than one proprietor in respect of identical or similar goods in cases of honest and concurrent use. The law recognises that a proprietor who has commercially used a mark for a considerable period and acquired goodwill should not be denied registration merely due to prior registration of a similar mark.

The Supreme Court in London Rubber Co. Ltd. v. Durex Products held that the doctrine requires commercial use of the mark over a considerable period of time. In the present case, however, Avon had not commenced use of the mark at all. Consequently, Section 12 has no application.

More importantly, Section 12 is rooted in consumer protection. By requiring long-standing concurrent commercial use, the Act recognises situations where consumers have come to associate competing marks with different proprietors, thereby reducing the likelihood of confusion. No such reasoning exists in the present case. Here, coexistence is permitted despite the absence of any concurrent market use, making consumer confusion far more likely.

The difficulty is not merely theoretical. It raises an immediate and practical question: what happens when Avon enters the market with its now-registered mark ‘20-20’?

The Futility of Opposition: When Passing Off Ultimately Prevails

Parle and Avon, as registered proprietors of identical marks, cannot maintain infringement actions against each other. This flows from the Supreme Court’s interpretation of Section 28(3) in S. Syed Mohideen (supra). Supreme Court held that “rights of passing off remain unaffected due to overriding effect of Section 27(2).” The statutory scheme, therefore, preserves common law remedies even as it limits infringement claims between co-registrants.

Crucially, this leaves Parle’s prior use and the goodwill attached to it intact, notwithstanding the Delhi High Court’s ruling. Once Avon commences use of its registered mark, a passing off action under Section 27(2) is not only conceivable but likely. In such proceedings, the ‘first in the market’ test regains centrality. On the facts, Parle, as the prior user with established goodwill, would be better placed to satisfy the elements of passing off: its long-standing use evidences goodwill; use of identical mark for identical goods would give rise to strong inference of misrepresentation specifically considering Avon’s knowledge of Parle’s mark following these proceedings; and the resulting likelihood of confusion shall support a claim for damages qua diversion of trade and dilution of goodwill.

This leads to an uneasy conclusion. A mark permitted to proceed to registration may, upon its actual use, be injuncted in a passing off action. In effect, the Act confers a right that the common law may immediately curtail.

The implications are significant. Avon’s registration risks being rendered commercially dormant, either restrained altogether or forced into a narrowed field of use. Even if Avon avoids direct conflict (for instance, by steering clear of biscuits), the practical scope of its mark stands redacted from the outset. The statute offers little guidance on reconciling such outcomes.

Conclusion

The decision exposes a deeper structural disconnect within trade mark law. The law effectively privileges filing consequently permitting coexistence of identical marks which have not been neither honestly nor concurrently used. While the opposition proceedings conclude in favour of the prior applicant, the possibility of a future passing off action grounded in prior goodwill continues to loom over actual market use. Registration, therefore, secures only a fragile form of certainty. Impliedly, the Delhi High Court’s ruling, guided by Section 18, resolves opposition proceedings but complicates the market. A more coherent approach, one that harmonises registry formalism with market realities, is urgently needed.