Between Suit Courts And High Courts: Decoding Trademark Rectification After The Tribunal Reforms Act

Abstract

This article critically examines the interplay between trademark infringement suits before civil courts and the rectification proceedings under the Trademarks Act, 1999, following the enactment of the Tribunal Reforms Act, 2021 (TRA), which abolished the Intellectual Property Appellate Board (IPAB) and transferred the jurisdiction for trademark rectifications to the High Courts. The TRA's amendments have led to significant procedural uncertainties, particularly regarding the initiation of rectification applications in the context of ongoing trademark infringement suits. Section 124 of the TM Act provides two primary routes for initiating rectification: (i) filing a rectification application before the High Court while seeking a stay from the Suit Court, or (ii) obtaining an adjournment from the Suit Court to file a rectification application if no such proceedings are pending. The article analyses key judicial decisions in the expansive precedents laid down by the Delhi High Court which provide clarity on the relationship between the Suit Court and High Court in adjudicating the tenability of invalidity claims and the need for rectification.

Further, the authors delve into the necessity imposed by the High Court as well as the Supreme Court for the Suit Court to assess the prima facie tenability of the invalidity plea before proceeding with rectification applications. The article also examines the jurisdictional complexities surrounding the filing of rectification petitions in High Courts outside the territorial jurisdiction of the Suit Court, drawing attention to potential conflicts and issues of binding effect. The article concludes by urging the need for judicial clarity, particularly from the Supreme Court, to resolve the jurisdictional and procedural ambiguities post-TRA.

Recently, the Indian judiciary, and especially the High Court of Delhi, has been heavily grappling with the law surrounding the challenge to the validity of a mark and the proceedings initiated therein for rectification of the registrar of marks. Earlier, the Trademarks Act, 1999 ("TM Act") envisaged for a procedure under Section 124 of the TM Act, whereby the Intellectual Property Appellate Board ("IPAB") adjudicated over such rectification proceedings. However, in 2021, the legislature, in a mass upheaval / amendment of varied acts with the intention to abolish various tribunals and transfer their jurisdiction unto the Commercial or High Courts, promulgated the Tribunal Reforms Act, 2021 ("TRA") whereby the IPAB was abolished and the powers therein, especially under Section 124 of the TM Act, were vested with the High Courts.

Interestingly, in contrast to the intent of the TRA, in the wake of the power to adjudicate the rectification proceedings under Section 124 of the TM Act brought about numerous points of debate, contrasting views and challenges, which account for an expansive and ever-growing jurisprudence qua the functioning and operations of the rectification process in the Indian landscape.

Statutory provisions regarding rectification applications filed under the Trademarks Act, 1999

Presently, an application for rectification of register can only be filed before a High Court (IPAB since abolishment by TRA) as per Section 125 of the TM Act. This in turn is supplemented by the process of filing of a rectification application stipulated under Section 124 of the TM Act, which poses two routes which the proposed applicant might take to initiate rectification proceedings, being:

1. filing a rectification application before the High Court and thereafter, seek a stay from the court trying the trademark infringement dispute ('Suit Court') in order to proceed with a rectification application; or
2. seeking an adjournment from the Suit Court basis a prima facie tenability of the rectification issue and subsequently file the rectification application before the High Court, if no such rectification proceedings are pending as on the date of filing of the suit before the Suit Court.

In respect of the former eventuality set forth hereinabove, a Division Bench of the Hon'ble Delhi High Court in Amrish Aggarwal Trading v. Venus Home Appliances (P) Ltd. ("Amrish")¹ categorically held that that the Suit Court may only grant a stay on proceedings basis rectification proceedings pending before the Registrar / High Court prior to institution of the proceedings of the Suit Court. Pertinently, the Hon'ble Delhi High Court, through Amrish, effectively overturned its own dicta in Sana Herbals (P) Ltd. v. Mohsin Dehlvi² wherein it was held that "if an issue with regard to invalidity of a trademark is framed by the civil court and rectification applications are filed by a litigant, the civil suit is not liable to be stayed."

However, if no such rectification proceedings are subsisting before the High Court, the applicant will have to approach the Suit Court under Section 124(1)(2) of the TM Act and prima facie convince the same qua the issue / challenge to the contested mark and the need to file rectification application in lieu of the same.

It may be relevant to highlight that the issues which are dealt by the authors as are detailed hereinbelow is effectively a non-issue when such rectification proceedings are initiated in courts having original ordinary jurisdiction / intellectual property rights divisions / rules as these rules in both scenarios, the High Court may have inherent powers / powers granted under the IPR Rules for consolidation as well as hearing the suit and the rectification proceedings together. However, this becomes a greater issue of concern when intellectual property right matters are being dealt by High Courts not having original ordinary jurisdiction and the matter has the tendency to go to the district court.

It is the intent of the authors to delve into the following two quandaries by way of the present article:

1. the necessity to obtain a stay from the Suit Court in order to approach the High Court (in the event where the Suit Court is a District Court/ in a matter in a jurisdiction not having original jurisdiction) for rectification proceedings where a challenge has been made to the impugned mark by the defendant.
2. by-passing the Suit Court and approaching the territorial High Court directly vide a rectification application; or alternatively, consider the aspect of approaching any High Court which the party may feel has the necessary jurisdiction.

Automatic stay and leave of the Suit Court

The statute and the dicta both elucidate that there does not persist an automatic stay on proceedings before the Suit Court presiding over the infringement issue in order to file a rectification application i.e., only if the Suit Court is of the opinion that a prima facie case in favour of stay of proceedings is made out, an adjournment of three months may be granted allowing the applicant to institute rectification proceedings before the High Court, during which the suit proceedings will be stayed.

Further, while Section 124 of the TM Act envisages for the aggrieved party to first approach the Suit Court to seek an adjournment in lieu of filing a rectification application, there are a string of judgements which have dealt with the jurisdiction of the High Courts (IPAB, prior to its abolishment) to entertain rectification proceedings exclusively, of the party approaching the Suit Court for deciphering the prima facie tenability of the issue.

The Full Bench of the Delhi High Court, in Data Infosys Ltd and Ors. v. Infosys Technologies Ltd.³ ("Data Infosys"), held that the Suit Court adjudicating the tenability of the plea qua invalidity of trademark cannot oust or exclude the jurisdiction of the High Court over the same. Essentially, it was clarified that the right of a party to seek rectification of the register maintained by the Trademark Registry is not extinguished in a situation where in a suit for infringement, the plea of invalidity is prima facie found to be untenable.

Interestingly, the Full Bench's view in Data Infosys came to be analysed and assessed by the Hon'ble Supreme Court in Patel Field Marshall Agencies and Anr v. P.M. Diesels and Ors ⁴ ("Patel"). While the Hon'ble Supreme Court asserted the exclusive right on the High Courts to adjudicate upon the merits of the rectification application, it effectively in narrative read down the import of Data Infosys to hold that "in a situation where a suit is pending (whether instituted before or after the filing of a rectification application), the exercise of jurisdiction by the prescribed statutory authority is contingent on a finding of the civil court as regards the prima facie tenability of the plea of invalidity." Further, it was held that where the Suit Court does not find the invalidity issue to be tenable/triable, the only recourse would be to challenge the said order.

The Hon'ble Supreme Court, in Patel, also clarified that the intent behind conferring discretion with the Suit Court to ascertain the prima facie tenability before approaching the High Court does not tantamount to permission or leave of the civil court, but in fact is a basic requirement to further the cause of justice by elimination of false, frivolous and untenable claims of invalidity that may be raised in the suit.

It is noteworthy that the Hon'ble Supreme Court in Patel, whilst departing from the dicta in Data Infosys, has not set aside the same. Moreover, nowhere in Patel has the Hon'ble Supreme Court held the dicta of Data Infosys to be incorrect or ultra vires, and has in fact, affirmed the same inter alia in relation to the jurisdiction of the High Courts to entertain rectification proceedings even after the efflux of time granted by the Suit Court to file rectification proceedings under Section 124 of the TM Act has lapsed.

There appeared to be a vacuum in relation to the issue in hand, which recently came for adjudication before the Single Bench of the Delhi High Court in Amrish Aggarwal Trading as M/s Mahalaxmi Product v. M/s Venus Home Appliance Pvt. Ltd.⁵ ("Venus") wherein the applicant had filed the rectification proceedings before the Delhi High Court prior to examination of the same by the Suit Court (which in this case was a District Commercial Court).

The Delhi High Court therein was dealing with the question as to whether the rectification petition could have been instituted even before the Suit Court framed an issue regarding validity of the defendant's mark and adjourned the proceedings by three months. By way of a detailed analysis, the court came to an understanding that the matter was first to be dealt with by the Suit court, and thereafter, instead of dismissing the application, merely kept the rectification proceedings in abeyance until the concerned issues are framed by the Suit Court. Upon examination, if the Suit Court does not prime facie find any tenable issue, the rectification proceedings will stand disposed of given the verdict in Patel as well as the dicta of the Delhi High Court thereafter.

In view of the predicament in the case above, the authors believe that an applicant can prefer a rectification application before the High Court directly, prior to the same being put before Suit Court. However, given the impetus on seeking leave of the Suit Court under Section 124 of the TM Act along with the dicta of the High Court in Venus, the rectification application may be adjourned sine die until the Suit Court prima facie observes tenability to the same and frames issues.

Interestingly, the Karnataka High Court, in the matter of Therelek Machines Private Limited v. Therelek Engineers Private Limited⁶, dealt with a situation in its Writ jurisdiction, wherein the court permitted the defendant to seek stay of proceedings on account of (a) pending rectification proceedings and (b) defense of invalidity raised by the defendant in its pleadings. Further, it was noted that the result of the rectification proceedings will have a direct bearing on the civil suit, and in case the trademark is held to be invalid, that part of the suit will be disposed off, since the Court in this case was dealing both issues of infringement and passing off.

In the eventuality of a stay by the Suit Court, which High Court can be approached for filing the rectification proceedings?

Now, the issue in hand further grapples with whether the filing of rectification application can be done only before the High Court having supervisory jurisdiction over the Suit Court or can another High Court be approached altogether given the dynamic impact of intellectual property rights felt in the other jurisdiction. While there does not persist any bar on the proposed applicant to approach a High Court in another jurisdiction, various courts have expressed their concerns qua filing of such application before the High Court, other than the appellate / supervisory jurisdictional High Court of the Suit Court.

The Delhi High Court in Dr Reddys Laboratories Limited v. Fast Cure Pharma & Anr.⁷ ("Dr. Reddys"), analysed the dynamic effect of the registration of the defendant's mark and held that in case, the applicant is able to show damage/infringement in the territorial jurisdiction of another High Court, it could institute the rectification petition in the said jurisdiction as well, in present case at hand it was jurisdiction between Chennai and Delhi . However, while making the said observation, the Delhi High Court did note the benefits of permitting the rectification petition to be decided on merits, by the same High Court which adjudicated on the tenability of the challenge, being inter alia, interests of wholesome administration of justice and to counter possible conflict of views.

Further, it is also understood that approaching another High Court will also invite questions regarding the binding value of the said proceedings on the proceedings before the Suit Court or the High Court (the appellate court for the Suit Court), since it is settled law that the decision of the High Court of one jurisdiction at best has merely persuasive value over the high court of another jurisdiction. Moreover, the said other High Court, by purport of Section 25 of the CPC, will have no power to consolidate or transfer proceedings of a court in another jurisdiction which further might cause issues in the enforceability of the rectification proceedings and the orders therein.

Conclusion

The aftermath of the TRA has left long-lasting repercussion on the legal framework and processes of our country which are being dealt with till-date by the Hon'ble judiciary. The aforesaid parts provide clarity to some practical conundrums that have come up and have been dealt with in the recent past, however, there is still need for clarity and finality on the same.

In a recent judgement of Hershey Co. v. Dilip Kumar Bacha,⁸ the Hon'ble Delhi High Court lamented the permission accorded to different High Courts to exercise original jurisdiction over rectification petitions and commented that the same was beyond the scope of the TM Act. Accordingly, the matter has been placed for consideration before a constitutional bench of five-judges of the Delhi High court and is currently pending and the ultimate decision of the constitutional bench judgment will also decipher and hopefully settle / clarify the issue conclusively.

However, this lack of uniformity in judicial opinions across the nation must be addressed and there needs to be some clarity on the issues, preferably from the Hon'ble Apex Court. The issue is further exacerbated since most of the High Courts do not have a dedicated Intellectual Property Division, unlike the Delhi and the Madras High Court, thus leading to a plethora of litigants preferring to institute proceedings before them for a speedier disposal. Considering the same, it would be extremely beneficial for the competent courts / the Supreme Court to clear the air around the jurisdiction quagmire caused post the TRA.

* Dr. Abhimanyu Chopra is a partner in the Disputes Resolution Team in AZB & Partners, New Delhi. Kushagra Jain is an associate in the Disputes Resolution Team in AZB & Partners. The views expressed in the article are the authors' personal views and do not reflect the views of the firm.

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Footnotes

1. Amrish Aggarwal Trading v Venus Home Application Ltd (2024) SCC OnLine Del 3652.

2. Sana Herbals (P) Ltd. v. Mohsin Dehlvi (2022) SCC OnLine Del 4482.

3. Data Infosys Ltd and Ors. v. Infosys Technologies Ltd (2016) SCC OnLine Del 677.

4. Patel Field Marshall Agencies and Anr v. P.M. Diesels and Ors (2018) 2 SCC 112.

5. Amrish Aggarwal Trading as M/s Mahalaxmi Product v. M/s Venus Home Appliance Pvt. Ltd (2022) C.O. (COMM.IPD-TM) 258/2022.

6. Therelek Machines Private Limited v. Therelek Engineers Private Limited, 2024:KHC:8187.

7. Dr Reddys Laboratories Limited v. Fast Cure Pharma & Anr (2023) SCC OnLine Del 5409.

8. Hershey Co. v. Dilip Kumar Bacha (2024) 1 HCC (Del) 461.

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