The Rights of Prior Users of Trade Mark under the Trade Marks Act, 1999

Introduction to trade mark: Its nature and importance

Under the Trade Marks Act of 1999 (hereinafter known as “the Act of 1999”), the owner of the registered trade mark has been given an exclusive invaluable right including the use of the said trade mark to the exclusion of others. However, this exclusive right to use the trade mark is not an absolute right in favour of the registered trade mark owner. The registration of a trade mark is subject to opposition by the opponent on various grounds enumerated under the Act either prior to registration or post grant of registration. An application for the registration of the trade mark shall be denied if the trade mark would fall under Section 9(1)(a) to Section 9(1)(c) provided that the mark has acquired distinctiveness because of its use prior to registration or if the mark is otherwise a well-known trade mark. There are several safeguards that have been given under the Act to safeguard the interest of unregistered trade mark users. To claim exclusivity of a user, the trade mark should be coined or fanciful or it should be altogether a newly created or coined mark. If the mark is an existing mark, then such an existing mark should not be descriptive characteristics of the products. Apart from this, there are several safeguards available to the defendants against the claim of infringement. Even if the proprietor owns the unregistered trade mark, the seminal theme of the Act is based on the “first user of the trade mark”.

The Act of 1999 gives primacy to the prior user of the trade mark even against the registered trade mark owner. For that purpose, Section 34¹ of the Act has been reproduced hereinbelow:

“9. Section 34 of the Trade Marks Act, 1999 (the Act) deserves reproduction herein:

34. Saving for vested rights. — Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods or services in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date prior—

(a) to the use of the first-mentioned trade mark in relation to those goods or services be the proprietor or a predecessor in title of his; or

(b) to the date of registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor of a predecessor-in-title of his; whichever is the earlier, and the Registrar shall not refuse (on such use being proved), to register the second mentioned trade mark by reason only of the registration of the first mentioned trade mark.

This section palpably holds that a proprietor of a trade mark does not have the right to prevent the use by another party of an identical or similar mark where that user commenced prior to the user or date of registration of the proprietor. This “first user” rule is a seminal part of the Act.”²

Procedure for registration of trade mark: The scheme of the Trade Marks Act, 1999

The Act of 1999 under Chapter III is concerned with the “procedure for and duration of registration”. Section 18 of the Act, provides for an application for registration of a trade mark which read as follows:

Any person claiming to be the proprietor of a trade mark used or proposed to be used by him, who is desirous of registering it, shall apply in writing to the Registrar in the prescribed manner for the registration of his trade mark.³

To register the trade mark for different classes of goods and services, a single application accompanied by prescribed fees can be made to the Registrar. The application must be made in the mode and manner prescribed under the Act and within the local limits of the applicant’s place of business and in the case of a joint applicant, where the first applicant’s place of business is situated.⁴ On receiving the application for the registration of a trade mark, the Registrar may: (1) either refuse the application; or (2) accept the application absolutely or subject to such amendments, modifications, conditions, and limitations as made by the Registrar.⁵ The Registrar’s power pertaining to refusal of an application for registration of a trade mark or conditional acceptance of an application for registration of a trade mark is coupled with the duty to record the reason for doing so.⁶ The discretionary power has been conferred upon the Registrar under the Act to revoke the acceptance of an application for registration even after the application has been accepted for registration of a trade mark. This power is to be exercised by the Registrar after due acceptance but before the grant of registration even too upon providing the right of hearing to the applicant and upon the satisfaction of two conditions mentioned hereunder in the Act which read as follows:

(a) If the applications have been accepted in error; or

(b) If the Registrar finds that the trade mark should not be registered or should be registered subject to conditions or limitations or subject to additional conditions or different from conditions or limitations subject to which the application has been accepted.⁷

Once the application has been accepted, the Registry shall advertise the application in the manner given under the Act.⁸ The purpose of advertisement is to afford an opportunity to the public at large to oppose the application. The Registrar is also conferred with the power to advertise the trade mark application before the acceptance of the application in cases where Section 9⁹ sub-section (1) and Section 11¹⁰ sub-sections (1) and (2) apply. The right to oppose the application is available to every member of the public.¹¹ An opposition application is to be made in the manner prescribed and accompanied by fees within 4 months from the date of advertisement/readvertisement. Once the opposition has been received by the Registry, the applicant is to serve with a copy of the opposition, and thereafter the applicant shall file a counterstatement within 2 months from the date on which the applicant received the opposition copy. If the applicant files the counter-statement within the said period then the copy thereof shall be served to the opponents but if the counter-statement was not filed within the said period then the application shall be deemed to be abandoned.¹²

An opportunity of being heard and to file shreds of evidence will be given to both parties.¹³ The decision is to be made by the Registrar, who either permits the application or rejects the application, upon hearing and looking at the shreds of evidence produced by the parties at the hearing.¹⁴ The decision to refuse the registration shall be based on whether the mark taken as a whole is causing confusion in the mind of the public. If the Registrar decides to register the trade mark, then such registration shall be made effective from the date of application and not from the date on which the Registrar decides to register the trade mark.¹⁵ The registration process shall be completed within 18 months from the date of application. The registration has been granted for 10 years from the date of registration. The registration shall be renewed perpetually and successively each time upon application accompanied by prescribed fees being made by the registered proprietors.¹⁶ If the registered proprietor failed to renew its trade mark within 6 months from the date of expiration of the last registration, then the Registrar shall remove the impugned trade mark from the register.¹⁷ However, the Registrar shall restore the trade mark, if the registered proprietor makes an application for renewal after 6 months but before the expiration of 1 year.¹⁸

Effect of registration of trade mark

Upon the valid registration of a trade mark, “the registered proprietor of the trade mark is given an exclusive right to the use of a trade mark in relation to the goods and services in respect of which the trade mark is registered”. Such right to “exclusive use of the trade mark” shall be subject to conditions and limitations as set out by the Registrar. If in any case, when another person, who is not the authorised user of the trade mark, is using a mark that is similar/identical marks to the registered trade mark in his own business, then it would lead to infringement of the trade mark. Therefore, the remedy for the infringement of the trade mark is only available to the registered proprietors.¹⁹ The Act categorically specified that “no person shall be entitled to institute any proceedings to prevent or recover damages for infringement of an unregistered trade mark”.²⁰ However, the Act recognises “the common law rights of the trade mark owner to take action against any person for passing off goods as the goods of another person or as services provided by another person”.²¹ The Act is also clear with respect to the situations where two or more persons are registered proprietors of identical or similar trade marks then the exclusive rights conferred upon registration by the Act shall not entitle any of them to use such exclusive rights such one another. The exclusive rights conferred upon registration to both the registered proprietors can equally be exercised by both of them against another infringer as he is the sole registered proprietor of the trade mark.²² After reading all the relevant provisions relating to the registration, it seems clear that the registered trade mark owner has rights superior to the rights of the registered user. However, the question arises time and again, whether the registered trade mark owner has superior rights over the unregistered trade mark owner in a case when the unregistered trade mark owner is a prior user of the trade mark. Or even if both the trade mark users have registered the identical and similar trade mark, then whose right shall prevail, in case, if one registered user to such trade mark is a prior user of the trade mark? The Act is silent on the points. However, the courts in India have answered these issues in a catena of cases which have been discussed elaborately hereinbelow.

Prior user to trade mark: Its advantage and protection

In S. Syed Mohideen v. P. Sulochana Bai²³, the respondent claims to be the prior user of the trade mark Iruttu Kadai Halwa since 1900 although she registered her trade mark in 2007. The major issue arises when the appellant who was also the registered trade mark holder of the mark Tirunelveli Irruttu Kadai Halwa since 2008. The mooted question arose in this case – “what are the rights of a registered trade mark holder against another person who also holds a valid registration of his trade mark”? The effect of the registration of a trade mark has been provided under Section 27 of the Trade Marks Act, 1999. Sub-section (1) of Section 27 encapsulates that “no suit of infringement will lie in respect of an unregistered trade mark”. Yet sub-section (2) of Section 27 recognises the common law rights of an unregistered trade mark owner to take action against any person for the passing of their goods/services as the goods/services of another person or the remedies thereof. Section 27 of the Trade Marks Act, 1999 has been reproduced below which reads as under:

27.No action for infringement of unregistered trade mark. — (1) No person shall be entitled to institute any proceeding to prevent or to recover damages for, the infringement of an unregistered trade mark.

(2) Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods or services as the goods of another person or as services provided by another person or the remedies in respect thereof.

For the purpose of answering the mooted question before us, it is also necessary to examine Section 28 of the Trade Marks Act, 1999. Section 28 encapsulates the rights conferred by this Act by the registration of the trade mark by the Registrar under the provisions of this Act. Sub-section (1) of Section 28 provides that “the registration of a trade mark gives the registered trade mark owner the exclusive right to the use of the trade mark in relation to the goods/services of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act”. However, the right provided under this sub-section has been subject to the provisions of this Act or is subject to the conditions and limitations to which the registration is subject. Sub-section (3) of Section 28 stated the provisions for the registered trade mark which are identical/similar to other registered trade marks. “It provides that when there are two or more registered trade mark owners whose marks are identical or similar to each other, the exclusive right to the use of marks shall not be deemed to have been acquired by any those of persons as against any of those persons merely because of registration of the trade mark but each of them shall have the same rights as against other persons as he would have if he were the sole registered trade mark owner”.²⁴ Sub-section (3) of Section 28 gives the registered trade mark owner the concurrent right to both the persons, herein in this case the plaintiff and the defendants, to use the trade mark in his favour. It is a matter of prudence that the plaintiff cannot say that its registered trade mark has been infringed upon when the defendant is also enjoying the registration of an identical/similar trade mark and such registration of the defendant’s trade mark has given him the same rights as provided under Section 28(1) of the Trade Marks Act, 1999. Hence, it can be said that the owner of a registered trade mark, cannot file a suit for infringement of trade mark, as against the other registered trade mark owner of identical or similar marks. On perusal of law, the pertinent question arises here whether the registered trade mark owner can file a suit for passing off remedy as against the other registered trade mark owner invoking the rights under Section 27(2) of the Trade Marks Act, 1999. Strictly speaking, what is the interrelationship between Section 27(2) and Section 28(3) of the Trade Marks Act, 1999?

Conclusion

The Court after examining all the relevant provisions of the Act arrived at the conclusion that the provisions of Section 27(2) for passing off remedy would still be available even when both the parties to the suit have registered trade marks for similar/identical goods or services. In order to arrive at this conclusion, the Court has given herein the below mentioned reasoning–

“On the collective reading of Sections 27, 28, 29²⁵ and 34 of the Trade Marks Act would show that the rights conferred by registration are subject to the rights of the prior user of the trade mark”. It is evident on reading Section 27(2) of the Act that the rights of any person for passing off remedy shall remain unaffected by mere grant of registration in favour of some other person in respect of identical/similar marks for identical/similar goods and services. Thus, “the rights in passing off remedy are originating from common law and not from the provisions of the Act and they are independent of the rights conferred by the Act”. Thus, the rights granted by registration of marks under the Act in the form of exclusivity are not absolute but are subject to the provisions of the Act. Section 28(3) did not mention anything about the right of passing off remedy and thus the right of passing off remains unaffected by the overriding effect of Section 27(2) of the Act. And also, the provision of Section 34 states that nothing in this Act shall entitle the registered owner of a trade mark to interfere with the rights of a prior user. The plain reading of the whole scheme of the Act recognises the rights of the prior user as superior to those of the registered user of the trade mark. “Thus, the action for passing off premised on the rights of the prior user generating goodwill shall remain unaffected by any registration under the Act. This proposition of law has been affirmed by the Supreme Court of India in N.R. Dongre v. Whirlpool Corpn.”²⁶

Besides the above reasoning given by the Court on the plain reading of the Act, there was additional reasoning given by the Court on the question as to why the rights of the prior user are superior to that of the registered trade mark user –

The common law remedy of passing off is considered to be a right for protection of goodwill in the business against misrepresentation caused in the course of trade and for prevention of resultant damage on account of the said misrepresentation.” For claiming the remedy of passing off, the party to the suit has to establish his case on three points: (i) goodwill; (ii) misrepresentation; (iii) damage. This classical trinity test was laid down by Lord Oliver in the popular “Reckitt and Colman Products Ltd. v. Borden Inc. (Jif Lemon case)²⁷” to establish three necessary elements: firstly, the goodwill owned by the trader; secondly, misrepresentation; third, damage to goodwill. The common law rule in the action of passing off is that no person is entitled to carry on his/her trade on the pretext that the said business is that of another person. The Supreme Court of India has also given an endorsement of this principle in Laxmikant V. Patel v. Chetanbhai Shah²⁸. Consequently, the examination of rights in common law which is based on goodwill, misrepresentation, and damage is independent of that of registered rights.

In the common law jurisdictions, it has been recognised that the passing off remedy is broader than that of the right to file suit for infringement of trade mark under the Act. So, the passing off remedy worked on the proposition that no person is entitled to represent his or her business as the business of another person. In Kerry’s Law of Trade Marks and Trade Names, the author posits and recognised the principle that where trade mark action fails, passing off action may still succeed on the same evidence. This has been explained by the learned author in the following words:

A claimant may fail to make out a case of infringement of a trade mark for various reasons and may yet show that by imitating the mark claimed as a trade mark, or otherwise, the defendant has done what is calculated to pass off his goods as those of the claimant. A claim in “passing off” has generally been added as a second string to actions for infringement and has on occasion succeeded where the claim for infringement has failed.

In the trade mark law, it is the fixed proposition of law that “the registration of the trade mark under the Act merely recognises the rights which are already pre-existing in common law and does not create any new rights of its own”. Thus, it can be said that the registration of a trade mark under the Act does not confer any new right to the mark claimed or any greater right than what already existed at common law and at equity without registration. However, it facilitates a remedy that may be enforced and obtained throughout the State. Registration itself does not create a trade mark. The trade mark exists independently of the registration which merely affords further protection under the statute.²⁹

In Neon Laboratories Ltd. v. Medical Technologies Ltd.³⁰the Court ruled that:

“We must hasten to clarify that – had the defendant-appellant commenced user of its trade mark ROFOL prior to or even simultaneous with or even shortly after the plaintiff-respondents marketing of their products under the trade mark PROFOL, on the defendant-appellant being accorded registration in respect of ROFOL which registration would retrospectively have efficacy from 19-10-1992, the situation would have been unassailably favourable to it. What has transpired is that after applying for registration of its trade mark ROFOL in 1992, the defendant-appellant took no steps whatsoever in placing its product on the market till 2004. It also was legally lethargic in not seeking a curial restraint against the plaintiff-respondents. This reluctance to protect its mark could well be interpreted as an indication that the defendant-appellant had abandoned its mark at some point during the twelve-year interregnum between its application and the commencement of its user, and that in 2004 it sought to exercise its rights afresh. It would not be unfair or fanciful to favour the view that the defendant-appellant’s delayed user was to exploit the niche already created and built-up by the plaintiff-respondents for themselves in the market. The “first in the market test” has always enjoyed pre-eminence. The Court has mentioned two judgments of its own as precedents that can be apposite to the subject, that is N.R. Dongre v. Whirlpool Corpn.³¹ and Milmet Oftho Industries v. Allergan Inc.³² In Whirlpool, the worldwide prior user was given preference and predominance over the registered trade mark in India of the defendant. In Milmet³³, the marks of pharmaceutical preparation were similar, but the prior user worldwide had not registered its mark in India whereas its adversary had done so. This Court approved the grant of an injunction in favor of the prior user. Additionally, in the recent decision in S. Syed Mohiden v. P. Sulochana Bai³⁴, this Court has pithily underscored that the rights in a passing-off action emanate from common law and not from statutory provisions, nevertheless, the prior user’s rights will override those of a subsequent user even though it had been accorded registration of its trade mark.”

Thus, the Supreme Court following the previous decision of S. Syed Mohideen v. P. Sulochana Bai³⁵ held that “the first in the market test has always enjoyed pre-eminence”. The rights of a prior user will normally override those of the subsequent user even though it had been accorded registration of its trade mark.³⁶