The principle of “Priority in adoption and use prevails over adoption in registration” is a well established judicial principle. This principle says that the rights of the prior user of a trade mark are on a higher pedestal than that of the rights of the owner of the registered trade mark. This principle, also known as the ‘First User’ rule is a seminal element of the Indian Trade Marks Act, 1999 (“the Act”).
Appositely, the Hon’ble Indian Supreme Court while dismissing the appeal in S. Syed Mohideen v P. Sulochana Bai held that the scheme of the Act is such that rights of the prior user are acknowledged superior to rights of the registered proprietor. Further, the Court observed that the registered proprietor cannot interfere with the rights of the prior user. Intriguingly, this notion is palpably accepted under Section 34 of the Act.
Section 34 of the Act provides that the registered proprietor or user of a trade mark does not have the right to prevent any other user from the use of an identical or similar mark, where the user has been ‘continuously’ using the mark prior to the registered user or date of registration of the user, whichever is earlier. Pertinently, this section imposes limitation (owing to the non-obstante clause) on Section 28 of the Act, which vests the registered user of a trade mark with certain exclusive rights. Thus, it is a well-established principle that the registered proprietor cannot disturb or interfere with the rights of the prior user of an identical mark or similar mark.
However, this principle is not absolute and has certain conditions that need to be fulfilled for the defence of prior use to succeed. This position has been clarified in India by the Hon’ble Delhi High Court in a recent case of Peps Industries Private Limited v Kurlon Limited. The Court in this case opined that for the defence of prior use to succeed, the prior user has to show ‘continuous and consistent’ use of the trademark. The Court further observed that the prior user also has to prove the ‘volume of sales’, for the defence to succeed.
THE JUDGMENT
Brief Facts of the Case
The case of the plaintiff is that the plaintiff filed for registration of his trademark ‘NO TURN’ on the basis of proposed to be used as its trademark on January 02, 2008. After applying for registration the plaintiff started using the trademark in respect of his mattresses from January 15, 2008. The plaintiff was then granted registration for the impugned mark on February 04, 2011, w.e.f. January 02, 2008. However, in August 2018 the plaintiff discovered that the defendant had also adopted the trademark ‘NO TURN’.
Consequently, the plaintiff issued cease and desist notice(s) to the defendant. The defendant while responding to the notice on October 31, 2018, used the defence of prior use on the said mark ‘NO TURN’. Subsequently, the defendant applied for registration of the said mark before the Registrar of Trademarks on December 24, 2018.
The plaintiff, thus, filed a suit praying for a permanent injunction against the defendant from using the said mark ‘NO TURN’ or any other which is deceptively similar thereto, amounting to infringement and passing off the defendant’s business as that of the plaintiff.
Issues before the Court
The following issues were formulated by the Court:
- Whether the defendant is the prior user of the trademark ‘NO TURN’?
- Whether the defendant is using the mark as a descriptive mark, thus entitled to protection and hence no injunction can be granted to the plaintiff?
Holding
The Court relying on numerous precedents provided certain principles with respect to the rights of the registered trademark of the identical trademark or prior user of the identical trademark. These include:
- The rights of the registered user of a trademark are subject to various provisions of the Act. Thus these rights although exclusive are not absolute.[i]
- The claim of passing off emanates from common law and thus independent of the Act.[ii]
- The rights of the Prior User are on a higher pedestal than that of Registered User.[iii] However, for the defence of prior use to succeed, it has to be proved that the mark has been used continuously for commercial purposes.[iv] Moreover, a defendant seeking defence under Section 34 of the Act has also to prove the volume of sales.[v] Merely issuing an advertisement would not constitute as using the mark.
The Court further held (after a collective reading of various provisions of the Act) that the action for passing off would be impervious even if a registration is provided under the Act. Furthermore, the action of passing off can be used even against a registered user.
Consequently, relying on various evidence, the Court answered the first question in the negative as the defendant could neither prove ‘continuous commercial use’ of the mark nor the ‘volume of sales’. Thus, the defence of prior use did not thrive.
Furthermore, the Court after scrutinizing the brochure of the defendant said that the defendant has been using ‘NO TURN’ not as a trademark rather it was used to describe the quality of the mattress that is the mattresses that do not require to be turned around are labeled as NO TURN. Consequently, the Court also answered the second question in the negative.
CONCLUSION
The Hon’ble Delhi High Court has done a tremendous job in clarifying the requirements to use the defence of prior use and thus escalating the threshold for using the said defence. However, the Court could have elucidated on one of the arguments given by the plaintiff that the defence of prior use taken by the defendant was an ‘afterthought’. Due care and diligence were shown by the plaintiff in all the procedure, whether it be sending a notice or opposing the registration application of the defendant. Thus a few questions need to be raised. Does the non-obstante clause of Section 34 of the Act override the principles of Section 31 of the Act? Would taking the defence of prior use always require the complete consideration of evidence, albeit duly registration and continuous use of the trademark, thus resulting in heavy litigation costs for the plaintiff? This requires clarity as taking the mere defence of ‘prior use’, although having a high threshold could result in adverse and unwarranted consequences.
[i]N.R. Dongre v. Whirlpool Corpn. AIR 1995 Del 300.
[ii]S. Syed Mohideen vs. P. Sulochana Bai (2016) 2 SCC 683.
[iii]Id.
[iv]Kamat Hotels (India) Ltd. vs. Royal Orchid Hotels Ltd. & Anr.
[v]Amaravathi Enterprises v. Karaikudi Chettinadu 2008 (36) PTC 688.
Very informative.
Thank You.