Right in trademark once relinquished cannot be claimed unless terms of relinquishment revoked: Delhi High Court

The Delhi High Court, on Tuesday, held that once a person expressly relinquishes the rights to a trademark, the same cannot be claimed again, directly or indirectly, unless the terms of the dissolution deed are novated or revoked (Ampa Cycles Private Limited vs. Jagmohan Ratra). .A Division Bench of Justices Rajiv Sahai Endlaw and Amit Bansal further found that if rights to a trademark have been relinquished to a third party, the relinquisher cannot restrain the assignee from exercising their rights over the trademark..In the instant case, the respondent, Jagmohan Ratra and one Hari Dutt Sharma had started a partnership firm in the name of M/s. Four Diamonds in 1983, dealing with cycles, tricycles, and other related products.In 1992 ABPL was incorporated, which had the respondent and the firm M/s Four Diamonds as shareholders. ABPL moved an application for registration of the trademark ‘AMPA’ but the same was not pursued and was treated as abandoned in 2002..On disputes arising between Hari Dutt Sharma and the respondent, a dissolution deed was executed in August 2003.As per the Deed, Hari Dutt Sharma was given complete rights to run ABPL with the use of the trademark ‘AMPA’ and the respondent renounced all his claims in respect of movable as well as immovable properties of the said company in favour of Hari Dutt Sharma..M/s Four Diamonds became a sole proprietorship run by the respondent.The dissolution deed provided that the respondent will use trademarks of ABPL for manufacturing all models up to 14 inches only. It was further provided that for a period up to three years, ABPL will not manufacture models up to 14 inches..Both the parties admitted that the terms of the dissolution deed were never modified, amended or revoked at any point of time.In 2013, ABPL stopped doing business and was struck off from the Register of Companies. The same year an assignment deed was executed between Hari Dutt Sharm, ABPL and Nishtha Sharma in favour of one Ajay Kumar Baswa. .In June 2018, the appellant company, AMPA Cycles was incorporated the company with son of Ajay Kumar Baswa (who was the assignee under the assignment deed) and son of Hari Dutt Sharma, as shareholders and began to use the trade mark, ‘AMPA’, The respondent then filed a suit claiming trademark over 'AMPA'. .A single-judge passed an order permanently injuncting the appellant from passing off the trademark. Aggrieved by this, the appellant approached this Court..The counsel for the appellant contended that the respondent by a dissolution deed had relinquished the use of the trademark in question and the same was being used by the appellant company for manufacture and sale of cycles. Therefore, the respondent is estopped from using the trademark..In contrast, the counsel for the respondent argued that after the dissolution of the partnership firm, all assets were transferred to the respondent. The respondent also submitted that ABPL stopped carrying out business in 2011, thus ceased to be associated with the trademark and the respondent was the sole user of the trademark..However, the Court found that the respondent’s contention lacked merit while placing reliance on the judgement by the Supreme Court in Ramdev Food Products Pvt. Ltd. Vs. Arvindbhai Rambhai Patel that held,“The matter may be considered from another angle. If the first respondent has expressly waived his right on the trade mark registered in the name of the appellant Company, could he claim the said right indirectly? The answer to the said question must be rendered in the negative. It is well settled that what cannot be done directly cannot be done indirectly.”.The Bench found that the facts of the above case were squarely applicable to the facts of the present dispute.“Once the respondent/plaintiff has expressly waived his right on the trade mark in favour of the appellant/defendant company, he cannot restrain the appellant/defendant company from exercising the aforesaid rights, even though the said rights have been exercised after passage of substantial time.”.Therefore, the Court held that even if Jagmohan Ratra or M/s Four Diamonds had any rights in the subject mark, the same were surrendered with respect to cycles above 14 inches on signing of the dissolution deed in 2003 since the deed vested these rights in Hari Dutt Sharma/ ABPL..The Court further noted that the appellant established goodwill with a substantial customer base and sales despite starting the use of the trademark only in 2018..Advocate Kaadambari appeared for the appellant while the respondents were represented by advocate Diva Arora..[Read Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.