Analysis of effect of acquiescence in Senior-Junior User Relationship in use of a mark

Introduction

The general idea surrounding use of trademarks is that only a single entity, that is the registered owner of the trademark or any other entity so licensed by the owner, are the only ones allowed to use a trademark. The trademark owner also has the right to restrain others from using similar or identical marks. The use of a registered trademark without the owner’s permission would amount to infringement of the trademark. However, there are certain exceptions to this general rule.

One scenario where an entity may be allowed to use a registered or identical trademark is in senior user-junior user scenario, which is also known as prior-subsequent user scenario. A junior user is the second or subsequent user of a mark who may or may not have rights in the mark depending on whether the mark is being used in the same territory as the senior (first) user. The senior user of a mark has rights superior to all others, and can generally exclude others from using their mark[1]. However, in certain cases, the junior user registers the trademark before the senior user, and in those cases, it acquires higher powers than the original user of the mark. This is although, very easily defendable by the original user, and the original user has a strong case if it can prove that it was using the mark before the junior user registered it and that it had generated goodwill in the market using that mark.

Senior user of a trademark still has a duty on itself to be aware and informed of the use of its mark by other entities. It cannot completely ignore the operations of a junior user, and it has to take necessary steps to restrict the use of such mark by a junior user. If it fails on this duty, the Court can rule in favour of the junior user. In Intex Technologies (India) Ltd. & Anr. V/s M/s. AZ Tech (India) & Anr[2], the Delhi High Court had held that “where the senior user had permitted the junior user to grow rapidly and establish a huge market presence without any action on the part of the senior user, and if an injunction were to be granted at a belated stage, it would amount to causing irreparable injury to the junior user. The balance of convenience when considered in the light of delay, would be in favour of the junior user”.

The same defense was taken by the defendants in a recent case before the Calcutta High Court, Ganesh Grains Limited and Anr. V/s M/s Shree Ganesh Besan Mills and Ors.[3] (“Ganesh Mills case”) but was rejected by the Hon’ble Court. Read along to find out why.

Facts of the case

The plaintiffs had approached the Court on grounds of infringement of trademark and passing off. They had alleged that the defendants used the word ‘Ganesh’ in a manner to establish allegiance of their product to that of the plaintiffs. The plaintiffs contended that their brand enjoyed a certain popularity in the region of West Bengal and North-Eastern states, and that they have been carrying on business continuously since 1936. They also produced before the Court estimates of revenue spent on advertising. They sought a permanent injunction against the defendants, restraining them from using the identical mark as it caused irreparable damage to their identity, business and goodwill. 

The defendants on the other hand contended that they had been in the same business since the 1980s and that the name ‘Shree Ganesh’ was taken from the name of their founder, Shree Ganeshlal Daryani. They claimed that ‘Ganesh’ being the name of a Hindu deity is generic in nature and that no single entity can claim rights over it. They also contended that the plaintiffs had not taken any appropriate measure to restrain the defendants from operating and thus the present suit is flawed, based on the authority in Intex Technologies[4].

Identical Trademarks and the test to determine similarity

An important element in a senior-junior user relationship is the likeness of the marks used by both the parties. The Delhi High Court, while deciding in Inter IKEA Systems BV V/s Annanya Gautam and Ors.[5], relied on several ‘tests’ that would determine whether two marks are identical or not. The Delhi High Court quoted McCarthy on Trademarks and Unfair Competition[6] “The typical shopper… retains only an overall, general impression created by the composite as a whole… The point is that the two marks should not be examined with a microscope to find the differences, for this is not the way the average purchaser views the marks…where there are both similarities and differences in the marks, there must be weighed against one another to see which predominate.” The Court relied on this observation to decide that the defendants indeed had a deceiving mark which intended to establish connection with the reputed trademark of IKEA. Even though the colors were different, on a general look, the marks looked similar and in fact sounded similar.

In the Ganesh Mills case, the Court opined that the mark used by the defendant was deceivingly similar to that of the plaintiffs. The Court observed that although the name used by the defendants was ‘Shree Ganesh’, in the actual mark, “the word “Shree” has been used in a manner so as to camouflage itself in the design of the label. The word “Ganesh” has been used prominently.” The Court did not rely on the Inter IKEA System case[7], but the reasoning is similar. On a general look, the marks looked similar and thus the Court established that the defendants deceivingly tried to establish allegiance with the mark of the plaintiff.

Acquiescence and its effect

S.33 of the Trade Marks Act, 1999 discusses the effect of acquiescence. It basically means inaction by the senior user as regards to the use of a similar mark by the junior user. The effect of acquiescence is that the senior user would no longer be entitled to pose a claim against the defendant.

The defendants in the Ganesh Mills case relied on this defence and pleaded before the Court that even though the plaintiffs were aware of the use of the mark by the defendants, they did not take any action to stop its use, and thus S.33 would apply, in light of the ruling in Intex Technologies (supra) case. In the case of GSK Consumer Healthcare S.A V/s. EG Pharmaceuticals & Ors[8]. the Delhi High Court had held that S. 33 would not be applicable against the proprietor of a registered trade mark. It was interpreted that this provision protects the registered rights of the subsequent proprietor as against the unregistered rights of prior user if the latter has acquiesced for a continuous period of five years in the use of a registered trade mark by the former.[9] The Court held that the defence of acquiescence was only available on the grounds of passing off. Further, the Court disallowed the Defendant’s defence of acquiescence on the ground that Defendant was notified of the opposition filed by proprietor of earlier registered mark.

In a similar fashion, the Court observed in the Ganesh Mills case that the defendants had filed registration of their mark before the Registrar six times, out of which three times it was opposed by the plaintiffs through trademark opposition notices, and the remaining three times it was rejected by the Registrar on its own account. Considering the circumstances of the case, the Court held that the defence of acquiescence was not available since the plaintiffs satisfied the Court that they had taken multiple measures to oppose the use of mark by the defendants.

Acquiescence is a deliberate act, and there is generally an underlying intention of the party that opposes the use of that mark. In Khoday Industries and Ors. V/s The Scotch Whiskey Association and Ors.[10], the plaintiffs were using a mark ‘Peter Scot’ for selling their whiskey. The defendant filed for rectification of the trademark before the Registrar on the ground that usage of the word ‘Scot’ implied that the whiskey was Scotch, but the product was not actually scotch whiskey, and was in fact manufactured at a distillery in Bangalore. The dispute reached the Supreme Court, and the Hon’ble Court in this case discussed the judgement in Power Control Appliances V/s Sumeet Research and Holdings[11]. The specific paragraph that was discussed mentioned: “If the plaintiff stood by knowingly and let the defendants build up an important trade until it became necessary to crush it, they would be stopped by their acquiescence…Acquiescence implies positive acts, not merely the silence or inaction such as is involved in laches”. 

However, in the cases where no underlying intention of a party is noted as such, there might be an honest mistake on part of the earlier user of the mark. The Court in Khoday Industries (supra) observed that inordinate delays or latches may be present because in the furtherance of trade, the plaintiff may not be aware of the infringement or may ignore it, as not being serious enough to hurt its business. In such cases, if the Court comes to the conclusion that prejudice may be caused to the general public who may be misled into buying goods of the defendant as that of the plaintiff, the Court will grant an injunction.

Communication with the junior user is proof that the senior user had knowledge about the junior user’s operations, and if such communication is proved, the senior user would likely be held to have  acquiesced to the use of the mark. However, this communication cannot be made to just anyone related to the senior user. In Make My Trip (India) Private Ltd. V. Make My Travel (India) Private Ltd.[12], the defendants had pleaded the defence of acquiescence, pleading that they had contacted persons in the plaintiff’s employment, and thus the plaintiff had knowledge about the operations of the defendant. The Plaintiffs stated that the communication was not with its management or any of its key managerial personnel who could be regarded as persons who ought to be aware of the Defendant’s existence.[13] The Delhi High Court accepted this submission and decided in favour of the Plaintiffs, rejecting the plea of acquiescence made by the defendants.  

Conclusion

The act of acquiescence is a positive, deliberate act by which a user of a mark lets another entity use that mark, which amounts to passive consent. Where a party has acquiesced, it would no longer have the right to claim an injunction against the other party for use of a similar mark.

The Courts in India have at several instances adjudged on what would constitute acquiescence. Generally, the Courts have adopted a case-to-case basis to decide where an injunction could be granted and where it cannot be. As opined by the Supreme Court in the Khoday Industries case[14], the Courts have to consider if any prejudice would be caused to the public at large if injunction is not granted and an entity is allowed to use a mark because of the other party’s acquiescence.

However, when we bring together the rulings in all the judgements discussed in this article, we can safely say that certain acts would constitute ‘actions’ by the earlier user to restrict the subsequent (junior) user from using a mark. The following are defenses that would be available to the earlier user against alleged acquiescence:

1. Proof of filing an opposition notice against registration of a mark;
2. Proof of filing for rectification/removal of a registered mark within a ‘reasonable’ period. This period by law, under S. 33 of the Trade Marks Act 1999, is 5 years;
3. Honest mistake in filing an opposition/notifying the junior user (to be decided on a case-to-case basis);
4. Acquiescence is pleaded against party that has a registered trade mark.
5. Proof of no communication with a key managerial personnel/managerial authorities of the earlier user of the mark.

[1] MarkLaw, Junior User, accessed at http://marklaw.com/index.php/trademark-terms-jl/193-junior-user

[2] MANU / DE / 0625 / 2017

[3] MANU/WB/0179/2021

[4] Supra note 2

[5] MANU/DE/3643/2018

[6] J. Thomas McCarthy, IV Ed., Clark Boardman Callaghan 2007

[7] Supra note 5

[8] MANU/DE/3521/2019

[9] LexOrbis, GSK Win in Otrivin Case (June 29, 2020), accessed at: https://www.lexorbis.com/gsks-win-in-otrivin/

[10] MANU/SC/2361/2008

[11] MANU/SC/0646/1994

[12] MANU/DE/3392/2019

[13] Tulip De & Kiratraj Sadana, Plea Of Acquiescence Under The Trade Mark Act, 1999 (November 29, 2019), accessed at: https://www.mondaq.com/india/trademark/869900/plea-of-acquiescence-under-the-trade-mark-act-1999

[14] Supra note 10