DELHI HIGH COURT RULES ON TRADEMARK CHALLENGES AND THE CONCEPT OF “PRIMA FACIE TENABILITY” UNDER TRADE MARKS ACT 1999

A single-Judge Bench of the High Court of Delhi (High Court) comprising of Justice C.Hari Shankar, passed an Order dated 17-10-2023 in the matter of Dharampal Satyapal Limited Vs. Mr Basant Kumar Makhija & Ors, CS(COMM) 806/2017 & I.A. 14129/2018 and reiterated the grounds for challenging the validity of a trademark and the “prima facie tenability” of such challenge.

FACTS:

i) That the aforesaid Interlocutory Application (I.A.) was filed before the Hon’ble High Court by one, Dharampal Satyapal Limited (Applicant) against Mr Basant Kumar Makhhija and Others (Defendants), who filed the Application under Section 124(1) of the Trade Marks Act, 1999[1] (Act), for framing of issues regarding (i) the invalidity of the Defendants’ Registration No. 14746572 pertaining to a device mark and (ii) adjournment of the present proceedings by three months so as to enable the Applicant to file a rectification petition, assailing the trade mark granted to the Defendant.

ii) That the Application “I.A. 14129/2018” filed by the Applicant under Section 124 of the Act in which the central question at hand revolved around the proper procedural approach for the Applicant to challenge the validity of the Defendant’s trademark registration under the Trade Marks Act. This challenge can either be initiated in the replication or through an amendment to the Original Complaint.

iii) In this matter, Section 124(1)(b) of the Trade Marks Act holds significant importance. It allows the Applicant to challenge the validity of the Defendant’s trademark. However, there is a specific sequence of events that must be followed. The Applicant can only challenge the Defendant’s trademark validity when the Defendants use Section 30(2)(e) (Limits on effect of registered trade mark)[2] defense in their written statement. This defense is based on the rights that the Defendants have acquired from the registration of their trademark.

iv) In this context, the High Court’s interpretation of Section 124(1)(b) is crucial. The provision suggests that if the Defendant relies on their trademark registration as a defense, the Applicant is entitled to challenge the validity of the Defendant’s trademark in their replication. A replication is a formal response designed to address the claims made by the Defendants in their written statement.

v) Thereafter, the Court rejected the argument put forward by the Defendants’ counsel that the Applicant should resort to amending the Original Complaint to challenge the validity of the Defendants’ trademark registration. This approach is seen as overly technical and not in line with the intended purpose of the replication.

vi) Furthermore, the Court highlighted that the case of Travellers Exchange Corporation Ltd. v. Celebrities Management Pvt. Ltd. 298 (2023) DLT 101 : (2023) 93 PTC 425 is not a supportive precedent for the argument that a challenge to the Defendant’s trademark registration cannot be made in a replication. The case primarily revolves around a previous order seeking permission to amend the complaint.

vii) However, in the legal context, this case discusses the interpretation and application of certain sections of the Indian Trade Marks Act. It specifically focuses on the notion of “prima facie tenability” in the context of trademark registration validity challenges.

viii) That the Order begins by emphasizing that the Applicant has indeed raised a plea of invalidity regarding the Defendant’s trademark registration, satisfying the requirements of the law. It further delves into the meaning of the term “pleads” in the relevant legal context and the broad scope it encompasses.

ix) The case then discusses the term “prima facie tenability” and clarifies its interpretation. The Court pointed out that this term should not be interpreted as a judgment on merits but rather as an indication of whether the challenge to the trademark’s validity is arguable. the Court cited a Supreme Court case, Patel Field Marshal Agencies v. P.M. Diesels Ltd 28(2018) 2 SCC 112 , to support this interpretation. The discussion also touches on the role of the Court in assessing prima facie tenability and how this determination influences the subsequent rectification proceedings. The case underscores that the Court’s findings should be limited to the arguability of the challenge and should not express an opinion on the merits of the case.

OBSERVATIONS:

The Hon’ble High Court Order dated 17.10.2023 pertains to a trademark dispute where the Applicant has challenged the validity of the Defendant’s trademark. The Court evaluated whether the Applicant has met the necessary criteria for filing such a challenge.

1) The Court acknowledged that the Applicant had already taken steps to challenge the validity of the Defendants’ trademark by raising specific points in the Complaint. It emphasized that the term “pleads” used in the law implies that the Applicant has adequately presented the grounds for challenge, which does not require the strict legal definition of “pleading.” Additionally, the term “plead” has various legal connotations and may refer to different actions in a legal context, not just the formal pleading stage of a case.

2) Based on these aforesaid facts, the Court settled that the Applicant has indeed raised a plea of invalidity of the Defendants’ trademark as per the legal requirements. Further, the Court then explained the concept of “prima facie tenability,” which means assessing whether the challenge has merit and is worth considering. The Court clarified that “prima facie tenability” only requires the Court to assess whether the challenge is arguable and not to determine its actual success. The Court believed that this term should not be rigidly interpreted, and the merits of the challenge should be left for the authority handling the rectification process, and not the Court where the infringement case is heard.

3) Thereafter, to support the aforementioned plea, the Court referenced a previous judgment of Pepsico Inc. v. Parle Agro Pvt. Ltd. 2023 SCC OnLine Del 5823, whereby, it was explained that the Court’s role is to assess whether the challenge is arguable, without making a definitive judgment on its merits. The Court’s findings regarding prima facie tenability should be strictly limited to determining the arguability of the challenge.

4) Later, the Court distinguished its interpretation of “prima facie tenability” from a different interpretation in another case (Burger King Corporation v. Ranjan Gupta 2023 SCC OnLine Del 1383) and stated that there’s no conflict, as the latter case doesn’t fully address the impact of Patel Field Marshal (supra).

5) Furthermore, the Court rejected the argument of the Defendant that a prior drafting of issues precludes the Court from framing of additional issues related to the validity of the Defendant’s trademark.

6) Finally, the Court accepted the Applicant’s Application and proceeded to frame an additional issue for consideration i.e.: “Whether the registration of the Defendants’ mark is valid?” The Court adjourned the hearing to a later date to allow the Applicant to file a rectification petition as required by the law. A related interim application is scheduled for further review on a future date.

CONCLUSION:

Based on the aforesaid observations, the Hon’ble High Court held that the Application and the supporting documents thereof to a trademark dispute wherein the Applicant challenged the validity of the Defendants’ Trademark. Hence, the Court accepted the Applicant’s Application and framed an additional issue for consideration regarding validity of the Defendants’ Trademark. The supporting documents also provide a clear and thorough analysis of the Applicant’s challenge, paving the way for further proceedings in the case. As a result, the Interlocutory Application filed by the Applicant before the High Court was allowed.

 

Sakshi Raghuvanshi

Legal Associate

The Indian Lawyer

 

[1] Section 124 of the Trade Marks Act 1999: 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 Applicant’s trade mark is invalid; or

(b) the defendant raises a defence under clause (e) of sub-section (2) of Section 30 and the Applicant pleads the invalidity of registration of the defendant’s trade mark, 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 Applicant’s or defendant’s trade mark are pending before the Registrar or the High Court, stay the suit pending the final disposal of such proceedings;

(ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the Applicant’s or defendant’s trade mark is prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the High Court for rectification of the register.

….

[2] Section 30(2) (e) of the Trade Marks Act 1999: Limits on effect of registered trade mark

(2) A registered trade mark is not infringed where—

….

(e) the use of a registered trade mark, being one of two or more trade marks registered under this Act which are identical or nearly resemble each other, in exercise of the right to the use of that trade mark given by registration under this Act.