DELHI HIGH COURT LIFTS STAY ON TRADEMARK PASSING OFF ACTION

A Single Judge Bench of the Hon’ble High Court of Delhi of Justice Asha Menon passed a Judgment dated 06-08-2021 in the case of Parveen Kumar Gupta v. Ravi Chadha, CM (M) 428 of 2021 and held that when a Rectification Petition is filed before the Intellectual Property Rights Board (IPRB) challenging the validity of the Petitioner’s Trademark, the Suit for Infringement of Trade Mark pending before the Trial Court has to be stayed under Section 124 of the Trade Marks Act, however, an action for passing off could continue.

In the instant case, the Petitioner had filed a Suit for Infringement of his proprietary Trade Mark “RACER” against the Defendants and also for passing off its goods as Petitioner’s goods before Tis Hazari Courts, Delhi (the Trial Court). However, the Trial Court stayed the Petitioner’s Suit, vide Order dated 06-03-2017.

Aggrieved, the Petitioner challenged this Trial Court Order dated 06-03-2017 before the Delhi High Court in a Petition CM (M) 737/2017, which was disposed of by the High Court, vide Order dated 06-12-2017, permitting the Petitioner to withdraw the said Petition and allowing it to approach the Trademark Registrar/Tribunal by Review Petition.

Meanwhile, the Respondents filed an Application under Section 124 of the Trade Marks Act 1999 before the Trial Court, seeking stay of the pending Suit Proceedings due to initiation of rectification proceedings filed by the Respondents before the IPRB. The Respondents further pleaded invalidity of the Petitioner’s Trademark before the IPRB.

Section 124: Stay of proceedings where the validity of registration of the trade mark is questioned, etc.—

(1) Where in any suit for infringement of a trade mark—

(a) the defendant pleads that registration of the plaintiff’s trade mark is invalid;

….. the court trying the suit (hereinafter referred to as the court), shall,—

(i) if any proceedings for rectification of the register in relation to the plaintiff’s or defendant’s trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings;…

Thereafter, the Petitioner filed a Review Petition under Section 114 of the Code of Civil Procedure, 1908 before the Trial Court and not the Trademark Registrar. The Trial Court observed that the Application for Review was filed by the Petitioner beyond the period of limitation. As a result, on 30-12-2020, the Petitioner filed an Application under Section 5 of the Limitation Act, 1963 for condonation of delay on the ground that time spent before the High Court in pursuing the CM (M) Petition be condoned. Subsequently, the Application under Section 5 of the Limitation Act, 1963 was rejected by the Trial Court vide Order dated 06-04-2021 and the Trial Court noted that the High Court, while disposing CM (M) 737/2017 did not comment on limitation and thus, no ground for condonation was made out. Hence, the Review Petition was disposed of.

Aggrieved, the Petitioner herein filed a Petition under Article 227 of the Constitution of India before the Delhi High Court seeking an order to quash and set aside the Impugned Order dated 06-04-2021 passed by the Trial Court; to allow the Application under Section 5 of the Limitation Act, 1963 filed by the Petitioner and, further allow the Review Petition filed before the Trial Court.

The Petitioner while placing reliance on the case of J. K. Oil Industries v. Adani Wilmar Ltd., 2018 SCC OnLine Del 9367 contended that when a suit was filed for infringement of trade mark as also for passing off, the filing of a rectification petition before the Intellectual Property Rights Board (IPRB) would result in the stay of the suit as far as infringement of trade mark was concerned under Section 124 of the Trade Marks Act, 1999, but that suit with regard to passing off was to continue. As Section 124 covers stay on suit for infringement of trademark but does not cover stay on passing off action.

Taking into consideration, the arguments advanced by the Parties to the dispute, the Bench stated “that it is settled law that Section 124 of the Trade Marks Act does not provide for stay of action against the passing off and was applicable only where a rectification application/cancellation has been sought against the registered trade mark that a plaintiff claims to be exclusively its own. This is intended to avoid conflicting decisions by the Civil Courts and the Tribunal. There is no such occasion arising in a suit for passing off. It is only when clever drafting discloses the intent of the plaintiff to get over the statutory bar, being aware of the rectification proceedings commenced against the trade mark that it claims is exclusively its own, as observed in Formica International Ltd. (supra), that the entire suit would have to be stayed till the rectification proceedings are completed. No such plea has been taken in the present case. In fact, such a plea cannot be taken as it is after the institution of the suit that the defendants/respondents have filed an application for rectification.”

Thus, while allowing the Petition under Article 227, the Delhi High Court noted that there is an error apparent on the face of the Impugned Order dated 06-04-2021 of the Trial Court. The Trial Court erred in directing that the entire Suit should be stayed, as it has been consistently held that while the suit for infringement of trade mark has to be stayed under Section 124 of the Trade Marks Act, when a rectification petition is filed before the IPRB, but an action for passing off could continue.

Suchitra Upadhyay

Associate

The Indian Lawyer & Allied Services

Edited by

Sushila Ram Varma

Chief Editor

The Indian Lawyer & Allied Services