India - Opportunity Given To Seek Invalidity Of Registration In Infringement Suit.

Legal News & Analysis - Asia Pacific - India - Intellectual Property

1 June 2020

 

Opportunity given to seek Invalidity of registration in Infringement Suit

 

In trademark infringement suits, the plaintiff is often faced with the challenge to overturn the defence of an existing registration in the defendant’s name. In such cases, the plaintiff is required to raise a plea of invalidity of the defendant’s registration so that an issue can be framed by the court on the same. Once such an issue is framed, it enables the plaintiff to pursue cancellation proceedings against the defendant’s registration.

 

Arun Chopra is the owner of the trademark “K-D-H Kake-Da-Hotel”. The trademark was first used by the late father in 1931 for a restaurant in Lahore and was originally granted registration in 1950. Arun Chopra discovered use of the marks Kaka Ka Dhaba, Kaka Ka Hotel, Kaka Ka Restaurant and Kaka Ka Garden and took action against the defendants which led to the case ‘Arun Chopra v. Kaka-ka Dhaba Pvt. Ltd. & Ors’. The issue in the present case was - whether the plea of invalidity of the defendant’s registration tenable?

 

The defendant countered with their registered trademark (device) “kaka-ka”, which was registered since 2006 and claimed that no infringement has taken place since they were using the mark since 1997. Both the parties argued on the question of similarity between the two marks.

 

The disputed mark

 

During the course of the proceedings, an ex-parte ad interim order of injunction against the use of the defendant’s marks was passed in March 2014. In 2018, the judge while passing an order on the applications of the plaintiff and defendant for interim injunction and its vacation noted that the defendant had an operating business for the last 15 years in the city of Nashik and had been using the expression “Kaka-ka” during the same period. Therefore, the defendant was permitted to continue using the name Kaka-ka Dhaba, Kaka-ka Restaurant and Kaka-ka Garden for its three restaurant/outlets already operating in Nashik. However, the defendant was restrained from using the name “Kaka-ka Hotel” and from opening any further outlets under the mark “Kaka-ka” during the pendency of the suit.

 

The plaintiff thereafter filed an appeal against the judgment, which was dismissed. The Court was occasioned to deal with the plaintiff’s application for the stay of proceedings in the suit based on a plea under Section 124 of the Trade Marks Act, 1999 that the defendant’s registration was invalid. This arose out of a petition it filed in December 2016 seeking cancellation of the registration of the defendant's trademark before the Intellectual Property Appellate Board (IPAB).

 

In order to adjudicate on the prime issue pertaining to the tenability of the plea of invalidity, the Court analysed the various provisions of Section 124 in light of the governing case laws of Patel Field Marshal Agencies and Ors. vs. P. M. Diesels Ltd. and Ors. (2018) 2 SCC 112 and Abbott Healthcare Pvt. Ltd. vs. Raj Kumar Prasad and Ors. 249 (2018) DLT 220.

 

The plaintiff, relying on the said judgements argued that from the contents of its replication it should be construed that a plea of invalidity of the defendant’s registration has been raised, which is prima facie tenable. Since the defendant has raised the defence of Section 30(2)(e) by citing its own registration for the device “kaka-ka”, therefore, Section 124 would get invoked by the plaintiff. It was emphasised that since the plaintiff has already filed the cancellation petition with the IPAB, it seeks a stay of the suit until the disposal of those proceedings.

 

On the other hand, the counsel of the defendant asserted that Section 124 can come into play for a post-suit cancellation only when (i) the pleadings disclose a challenge to the validity of a registered trademark, and (ii) that plea is found to be prima facie tenable. It was further asserted that the present application is not maintainable as the plaintiff has applied to the IPAB without any finding by this Court regarding the prima facie tenability of its plea of invalidity of the defendant’s mark.

 

The Court observed that in the case of Patel Field Marshal, the Supreme Court expressly contemplated that where a suit is pending, whether instituted before or after the filing of a cancellation, the exercise of jurisdiction by IPAB is contingent on a finding of the civil court as regards the prima facie tenability of the plea of invalidity. Thus, the party alleging invalidity is bound to approach this Court after the institution of cancellation proceedings; however, the jurisdiction of IPAB to proceed would be based on the findings of the Court. It was also noted that where the civil court does not find a triable issue on the plea of invalidity,

 

the only remedy of an aggrieved party would be to challenge that order in appeal. This would be necessary to avoid multiple proceedings and conflict of decisions.

 

From the contents of the replication of the plaintiff it was noted that it had expressly stated only about the mala fide intention of the defendant and the similarity of the marks. Therefore, the defendant’s counsel contended that there is no plea of invalidity of the defendant’s registration made by the plaintiff and that the Court should not consider it to be; otherwise every plaintiff’s usual assertion of similarity of marks in a trademark infringement action would by itself also amount to a plea of invalidity of the defendant’s registration and that there should be something more in the pleadings to actually give rise to such a plea.

 

However, the Court noted that the replication was filed by the plaintiff way back in 2014 when these issues had not been settled. It was also observed that although there is no express plea with regard to the invalidity of the defendant’s mark, the enquiry must be based on a holistic and meaningful reading of the pleadings rather than a formulistic recital of a particular plea. The Court emphasized that such an approach would be particularly important since a finding against the party seeking cancellation of registration would render the plea abandoned for all time; and in view of the case of Patel Field Marshal, the civil court would have no jurisdiction to decide this plea and the jurisdiction of the IPAB for doing so would have already been ousted. The Court also observed that there was phonetic and structural similarity between the registered mark of the plaintiff and the words “KAKA-KA” forming the principal part of the defendant’s registered mark and thus, the plea of the plaintiff is prima facie tenable. The Court observed that this test is also satisfied by the grant of an interim order by this Court whereby it was noticed that the issue of likelihood of confusion would require adjudication at the trial. Moreover, the injunction against the defendant from opening any further outlet with the name “KAKA-KA” during the pendency of the suit, which was affirmed by the Division Bench after noticing the registration obtained by the defendant, also indicated the prima facie tenability of the plaintiff’s plea.

 

The Court also noted from the case of Abbott Healthcare wherein reliance was placed on Teva Pharmaceutical Industries Ltd. v. Natco Pharma Ltd., that the litigant ought not to suffer for poor pleadings; and in view of the fact that the case of Patel Field Marshal is of recent vintage and there is no precedent on this aspect, benefit should be given to the plaintiff. It was also noted that in the case of Abbot Healthcare, the Court did raise an

additional issue as to the validity of the defendant’s mark and stayed the suit pending adjudication of the rectification / cancellation by the IPAB.

 

Finally, the Court observed that since the issues have not yet been framed in the suit, at this stage, it would be appropriate to frame only the issue necessary for disposal of the present application. Consequently, the Court framed the following issue: Whether the registration of the mark “ka ka-ka (device)” in favour of the defendant is invalid and liable to be rectified? Thus, the Court allowed the plaintiff’s application and ordered the suit to be stayed until disposal of the plaintiff’s cancellation petition by the IPAB.

 

The present case highlights that a hyper technical approach may not meet the ends of justice, especially where the surrounding facts and circumstances also justify that an opportunity should be given to a party to apply for the invalidity of its adversary’s registration.

 

Article was 1st published on Lexology.
 

 

 

For further information, please contact: 

 

Manisha Singh, Partner, LexOrbis

manisha@lexorbis.com