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In a recent judgement, the Madras High Court answered an interesting question of law in the case of M Murali v. Sri Krishna Sweets Private Ltd and anr. The matter was a Civil Revision Petition arising out of an order passed by the district court in a suit for infringement of a trademark.
Section 124 of the Trademarks Act, 1999 states that there could be two situations as regards a particular case.
1. Prior to the institution of the suit for infringement, the opposite party could have already filed an application for removal of the trademark before the Intellectual Property Appellate Board (IPAB).
2. Post institution of the suit, the application for removal could be filed before the IPAB.
In both these situations, in order to give an opportunity to the person challenging the trademark and in order to avoid conflicting decisions between the two fora, the trial court is to relegate the issue of deciding the validity of the trademark to the IPAB and then decide on the suit as the outcome before the IPAB has a bearing on the suit. Until such time, the proceedings before the trial court are to be stayed.
The Madras High Court, in Sri Krishna Sweets, had an opportunity to lay down the law as to when a party may be entitled to approach the IPAB in relation to the validity of the Trademark, and when such an issue could be framed.
The legal issue that was involved was whether an additional issue regarding the validity of the mark ought to be framed by the trial court in the circumstances of the instant case, when there was no plea questioning the validity of the plaintiff’s registered trademark in its pleadings.
In the given case, the written statement filed by the defendant was held not to have any pleading challenging the validity of the plaintiff’s registered trademark. Hence, the defendant was not entitled to have an issue framed in relation to the validity of the trademark.
The PM Diesel Case
The law on this issue had been laid down by the Supreme Court in Patel Field Marshal Agencies and anr v. PM Diesel Limited and ors. The Court held that the exercise of jurisdiction by the statutory authorities on the issue of invalidity of the trademark is contingent on a finding of the trial court on the prima facie tenability of the issue/plea raised.
If the civil court does not find a tenable issue on the plea of invalidity, the aggrieved party cannot independently challenge the validity of the trademark before the IPAB without such an issue being framed, it was held. If the trial court holds that there is no prima facie tenability in relation to the validity of the mark, the only remedy available is to challenge the order of the trial court by way of an appeal, and not to independently approach the statutory authorities for rectification.
Analysis of the Sri Krishna Sweets judgment
The said judgement of the Supreme Court was delivered in November 2017. An interesting issue that arose in present case before the Madras High Court is that prior to the PM Diesel judgment, the instant suit for infringement of a trademark was filed and the defendant had also filed his written statement.
Although the pleadings were completed in the suit, the defendant failed to question the validity of the plaintiff’s mark and had independently challenged the validity of plaintiff’s mark by filing a rectification petition before the IPAB under Sections 47 and 57 of the Trademarks Act.
Based on the pleadings on record, the trial court (post the PM Diesel judgment), framed the issues on December 21, 2017, and no issue on the validity of the plaintiff’s mark was framed. The same was not challenged by the Defendant at that point in time.
The order framing the issues was not challenged by the defendant and the same attained finality. The defendant, after about 11 months from the pronouncement of PM Diesel, filed an application for framing additional issues in October 2018.
The question which was to be decided in the said case was whether the defendant was justified in filing an application for framing additional issue on the validity of the plaintiff’s registered mark in absence of a specific pleading, more so after having not challenged it earlier?
The Madras High Court distinguished the judgment of the Delhi High Court in Abbot Health Care Pvt Ltd v. Rajkumar Prasad and ors on the ground that the principle enunciated in the said case will not apply to the case on hand, as there is no pleading as to invalidity of registrations, much less a poor pleading. It further observed that the defendant had not raised any clear, valid material proposition as to the invalidity of registration of plaintiff’s trademark throughout the pleadings.
The Delhi High Court in the above mentioned case and in Sun Pharmaceutical Industries Ltd vs Systopic Laboratories Ltd, despite observing the importance of a specific pleading challenging the validity of the mark in an infringement suit, held that the need for framing additional issue arose subsequent to the PM Diesel judgement. Since this was a recent development, the Delhi High Court allowed the application for framing of additional issues even in the absence of the specific pleading in both the cases.
In the instant case, the Madras High Court affirmed that a petition for stay under Section 124 will lie only when the validity of the registered trademark is questioned and not otherwise. It was also held that a party, which despite having the materials to raise a plea of invalidity, failed to the raise the same, cannot be permitted to raise the issue in subsequent pleadings, as it amounts to constructive res judicata.
The said view of the Madras High Court is in line with the PM Diesel judgement and has further clarified the position of law under Section 124 of the Act. It did not impose any further restriction in approaching the statutory authorities for rectification during the pendency of the infringement suit, which is permitted subject to the conditions specified in the said section. The condition of framing an issue by the trial court was envisaged by the legislature and was incorporated into the provisions of the Act by use of the words “raise an issue regarding the same” under Sec.124(1)(b)(ii) of the Act.
It is pertinent to note that in the said case, the defendant’s rectification application challenging the validity of the plaintiff’s mark, was returned as defective and was abandoned under Rule 7(4) of the IPAB Procedures Rules, 2003.
However, the IPAB granted liberty to the defendant to file a fresh rectification petition and the plaintiff challenged the order by way of a writ petition before the High Court. In the writ petition, the High Court left the issue open for the trial court to deal with respect to the tenability of the issue of invalidity and the rectification proceeding before the IPAB was stayed until then. Later, the trial court rejected the application for framing additional issue by the defendant as the right to file rectification was already abandoned by the defendant by virtue of Rule 7(4).
Based on the assumption that the rectification petition was pending, the trial court had previously granted a stay under Section 124(3), although the application for stay was filed by the plaintiff. Later, the stay was also vacated due to the abandonment of the rectification petition and the same was challenged before the High Court in this very same case.
The High Court held that the rectification application filed by the defendant is an unborn child, and having failed to rectify the defects within the timeline provided under the Act and Rules, the defendant had lost the right to question the validity forever.
To sum up, Madras High Court held that a party who has not pleaded the invalidity of the registered trademark loses the right to have an additional issue being framed.
While dismissing the revisions petitions the High Court culled out the following principles:
1. A party who has acquiesced to framing of issues and not raised a plea in the subsequent pleadings is estopped from raising an additional issue as to the invalidity the mark.
2. Change of legal position, bereft of specific pleading as to validity of the mark, cannot by itself be a ground to frame an additional issue.
3. A party who has not pleaded the invalidity of the registered trademark does not have a locus to file a petition under S.124 of the Trade Marks Act.
4. Failure to raise an objection in the main or subsequent pleadings as to the validity of the mark, even after filing rectification application, amounts to admission of the validity of the registered mark.
5. The plea of non-user will not fall within the purview of Section 124 of the Trade Marks Act. There by meaning that there is a difference between removal of registration (on the gound of non-use of the trademark) and rectification of the register (based on the plea of invalidity).
6. A party despite having the materials to raise a plea of invalidity, fails to the raise the same, cannot be permitted to raise the issue in subsequent pleadings as it amounts to constructive res-judicata.
7. A party who has not challenged the framing or non-framing of an issue in appeal or revision when the issues were originally framed, is barred from re-agitating the very same issue.
8. Consequently i if an issue with regard to the invalidity of the registration of mark is not framed, the IPAB shall not entertain an application for rectification, and it is barred.
By virtue of this judgement, the law has been clarified and the principles in such a scenario have also been spelt out.
The onus therefore is on the trial court to deal with the tenability of the issue in relation to the plea of invalidity, based on the facts and circumstances of the given case. If, in the event the trial court holds that an issue ought not to be framed, then it shall no longer be res integra that the party could ride twin boats of both a suit in the civil court and the IPAB. This was laid down with a definite and clear intention that a party shall not be allowed to use this as a dilatory tactic to defeat the ends of justice.
The larger question, however, is what happens to the plethora of applications filed before the IPAB which are still pending post the decision of PM Diesel?
The courts in the future may take the view similar to that of the Madras High Court in order to arrest any delay that is caused by the parties to the proceedings.
[Read the judgment]
M Sricharan Rangarajan is an Advocate & Special Government Pleader at the Madras High Court. He was the counsel on record for the respondents in this case.
Hariharan Annadurai is an Advocate practicing at the Madras High Court.