Forging the Path of Trademark Rights: Unravelling the ‘RATHI’ Dispute within the Rathi Family

Case Citation:

Dhananjay Rathi vs. Shree Vasu Steels Private Limited and Ors., MANU/DE/3191/2023 decided on 15.05.2023 in the High Court of Delhi.

Introduction:

This case involves a dispute over the use of the trademark “RATHI” in relation to steel products. The Rathi Family, who has been in the steel industry for over 80 years, started manufacturing steel products under the mark “RATHI” in 1942. Two companies, G.D. Rathi Steels Limited and K.L. Rathi Steels Limited, were formed in 1969 and both manufactured steel products under the brand name “RATHI.” The mark “RATHI” was registered in the name of K.L. Rathi in 1975 and in the name of G.D. Rathi in 1980, with certain territorial restrictions.

In 1995, two trusts, Rathi Foundation (hereinafter referred to as RF) and Rathi Research Centre (hereinafter referred to as RRC), were formed, and the rights to the mark “RATHI” were assigned to these trusts. The trusts granted licenses to the Rathi Family members to use the mark. However, the trustees of RRC subsequently amended the trust deed to allow granting licenses to third parties. This led to a dispute, as some members of the Rathi Family alleged that the licenses granted by RRC to third parties violated the terms of the memorandums of understanding and trust deeds.

Dhananjay Rathi, representing the interests of the Rathi Family, filed a suit seeking a permanent injunction against the defendants (including Shree Vasu Steels Private Limited) from using the mark “RATHI” and against the trustees of RRC from issuing licenses to any third party.

Procedural History:

The case was filed in the High Court of Delhi. The court considered several interim applications (I.A.) filed during the proceedings. There were lower court rulings prior to this case.

Issue Presented:

The main legal issue in this case is whether the licenses granted by the trustees of RRC to third parties for the use of the mark ‘RATHI’ are valid or whether they violate the terms of the memorandums of understanding and trust deeds.

Rules of Law:

The relevant legal principles and rules applicable to this case include:

• Code of Civil Procedure, 1908 (CPC) – Order XXXIX Rule 1: Provides for the grant of temporary injunctions.
• Code of Civil Procedure, 1908 (CPC) – Order XXXIX Rule 2: Sets out the conditions for the grant of an injunction.
• Code of Civil Procedure, 1908 (CPC) – Order XXXIX Rule 4: Deals with the duration and modification of injunctions.

Precedents:

The court referred to previous cases such as Peps Industries Private Limited vs. Kurlon Limited[1], Relaxo Footwears Limited vs. XS Brands Consultancy Private Limited and Ors[2]., and Shri Ram Education Trust vs. SRF Foundation and Ors.[3] for guidance on the interpretation and application of relevant legal principles in the context of intellectual property rights.

Petitioner’s Arguments:

• The petitioner was unaware of the basis on which defendants 1 to 3 were using the mark “RATHI” when the suit was filed. It was only after the defendants filed their written statement that the petitioner learned about the licenses granted by defendants 13 to 18. Therefore, the petitioner sought to include defendants 13 to 18 in the suit.
• The petitioner argues that defendants 13 to 18 took a different position in previous suits involving the mark “RATHI” (CS(COMM) 961/2018). The petitioner contends that the defendants cannot take inconsistent positions and should be bound by the pleadings in the earlier suits.
• The provisions of the new Trust Deed are inconsistent with the provisions of MoU-2. The petitioner argues that the provisions of MoU-2 should take precedence based on Clause 6 of the new Trust Deed.
• RRC is not authorized to grant licenses to third parties (defendants 1 to 3) for the use of the mark “RATHI.” The petitioner asserts that there is a family understanding that the mark should only be used by male blood descendants of the Rathi Family and not licensed to any third party.
• Allowing defendants 1 to 3 to use the mark “RATHI” on sub-standard goods will dilute the mark and harm the associated goodwill.
• RF, as the prior user of the mark “RATHI,” is entitled to an injunction against RRC for passing off.

Defendant’s Arguments:

• K.L. Rathi did not give consent for the registration of the mark “RATHI” in favor of G.D. Rathi, nor was any such consent sought.
• The petitioner cannot seek to injunct defendants 13 to 18, the registered proprietors, or defendants 1 to 3, the “permitted users” of the mark “RATHI” under Section 2(1)(r) of the Act. The defendants rely on Sections 29(1), 28(3), and 30(2)(e) of the Act to support this argument.
• The two MoUs mentioned are separate and independent documents. Any similarity in language is inconsequential and irrelevant. The petitioner is not a party to MoU-2, and defendants 13 to 18 are not parties to MoU-1.
• The authority to enter into an MoU and amend the Trust Deed lies with the six family members. Clause 5.4 of MoU-2 grants the power to amend the Trust Deed dated October 18, 1995.
• The petitioner has not sought the cancellation of the new Trust Deed dated November 6, 2020, which is a registered document. The terms of the new Trust Deed are not challenged in the present suit.
• The licenses granted by RRC clearly state that RRC controls the quality and distribution of goods manufactured and sold by defendants 1 to 3. The petitioner has provided no evidence of defects in the quality of goods, rendering their claim of dilution of the mark “RATHI” baseless.

Analysis and Reasoning:

In this case, the court is addressing the legal issues surrounding the use of the mark “RATHI” by multiple entities within the Rathi family. The court begins by referring to relevant provisions of the Trade Marks Act, specifically Sections 12, 28(3), and 30(2)(e). These provisions deal with the registration and rights conferred by registration of trade marks.

The court analyzes the provisions and concludes that in cases of honest concurrent use or special circumstances, the Registrar may permit the registration of identical or similar marks by more than one proprietor. It further states that when multiple persons are registered proprietors of identical or similar trademarks, each of them has the right to use the trade marks. The court also notes that the use of a registered trade mark by one of the registered proprietors, when there are two or more nearly resembling trademarks, does not constitute infringement under the Act.

The court holds that both RF and RRC, as registered proprietors of the mark “RATHI,” have a concurrent right to use the mark, and neither of them can prevent the other from using it. It emphasizes that once registration had been granted to GD Rathi in 1980, the plaintiff (RF) could not restrict GD Rathi’s use of the mark.

The court also examines the Memorandum of Understandings (MOUs) and Trust Deeds executed within the Rathi family. It determines that the MOUs and Trust Deeds were separate and independent documents governing different branches of the family. The court concludes that there was no mutual and oral understanding between all members of the Rathi Family regarding the use of the mark “RATHI” for the common benefit of the family.

Furthermore, the court refers to a previous case, Shri Ram Education Trust v. SRF Foundation & Anr., where it was held that when a family name is adopted by different branches of a family, one branch cannot appropriate it to the exclusion of others. The court cites this case to support its conclusion that the earlier registration of the mark “RATHI” by KL Rathi does not extinguish the rights of other family members.

The court rejects the plaintiff’s argument that the members of RRC were bound by the MOU-1/Trust Deed-1 of RF or that there was a mutual understanding to protect the mark “RATHI.” It states that the pleadings in a previous suit filed by the plaintiff (Anil Rathi v. Jaipur Steel Tech.) do not establish such binding obligations between the members of RRC and RF.

Holding and Decision:

The court’s holding is that both RF and RRC, as registered proprietors of the mark “RATHI,” have concurrent rights to use the mark. The court concludes that the plaintiff cannot control the usage or licensing of the mark by RRC, as RRC has an independent right to use or license the mark according to the provisions of its own MOU and Trust Deed.

Implications and Significance:

The court’s decision has broader implications in the context of trade mark rights within a family and the concurrent use of similar marks. It establishes that when multiple family members use a family name as a trade mark, one branch of the family cannot exclusively appropriate it to the detriment of others. This decision reinforces the principle that the goodwill and reputation associated with a trade mark should benefit all members of the family, unless specific exclusions have been made.

The decision also clarifies the rights of registered proprietors of identical or similar trademarks. It highlights that registration alone does not confer exclusive rights on one proprietor over another, and that each registered proprietor has the right to use their respective trade mark.

Critique and Commentary:

The court’s reasoning appears sound and is supported by relevant provisions of the Trade Marks Act. The court correctly interpreted the provisions concerning the registration and rights conferred by registration of trade marks, specifically addressing the issues of honest concurrent use and special circumstances.

The court’s decision is significant in clarifying the rights of registered proprietors of identical or similar trade marks. It emphasizes that registration does not automatically grant exclusive rights to one proprietor over another. This interpretation aligns with the underlying principle of trademark law, which aims to prevent confusion among consumers and protect the interests of both registered proprietors.

The court’s reliance on the case of Shri Ram Education Trust v. SRF Foundation & Anr. is also noteworthy. By referencing this case, the court establishes a precedent that a family name cannot be monopolized by one branch of the family to the exclusion of others. This ensures that all family members have the opportunity to use and benefit from the family name as a trade mark.

However, it is important to note that the court’s decision is based on the specific facts and circumstances of this case. The court examined the MOUs and Trust Deeds executed within the Rathi family and concluded that they did not establish a mutual understanding or binding obligations regarding the use of the mark “RATHI.” It is crucial to consider the individual facts and agreements in similar cases to determine the rights and obligations of the parties involved.

In conclusion, the court’s decision provides clarity on the rights of registered proprietors of identical or similar trademarks and reinforces the principle of equitable distribution of family names as trademarks. It highlights the importance of considering both statutory provisions and the specific circumstances of each case to determine the extent of trade mark rights and obligations.

[1] MANU / DE / 3831 / 2022

[2] MANU / DE / 0899 / 2019

[3] MANU / DE / 0181 / 2016

Anil Shete

Author

I am a law graduate with a keen interest in intellectual property rights (IPR). I hold a degree of LL.B from the prestigious Government Law College, Mumbai, and am currently pursuing an LL.M degree from the University of Mumbai, specializing in IP law. I have successfully cleared UGC-NET in History and hold an M.A degree in History from the University of Mumbai.