1 October 2011Jurisdiction reportsJ.V. Abhay

Rectification and stay

Section 124 of the Trade Marks Act, 1999, which is pari materia to Section 111 of the previous legislation, the Trade and Merchandise Marks Act, 1958, envisages a stay of a lawsuit for infringement when validity of the registration has been questioned. This provision has courts enunciating varying interpretations.

Section 124 mentions two situations where a lawsuit may be stayed by a court. Firstly, when rectification proceedings, or any such proceedings involving the trademarks of either party, are pending prior to the filing of the lawsuit and secondly, when no such proceedings are pending. In the second case, the party pleading invalidity of the trademark is required to satisfy the court that its plea is prima facie tenable.

The court then has to frame an issue as to invalidity and adjourn the lawsuit for three months to allow the party to apply for rectification at the Intellectual Property Appellate Board (IPAB). The trial is stayed until the rectification proceeding is concluded. The court can also pass an interlocutory order, inter alia, of temporary injunction.

Indian courts have consistently held that a lawsuit should be stayed when a rectification proceeding is filed prior to the lawsuit. However, when rectification is not pending, the issue of whether a party can file for rectification without satisfying the court as to the prima facie tenability of its plea of invalidity and seek a stay of the lawsuit has been interpreted differently.

"INDIAN COURTS HAVE CONSISTENTLY HELD THAT A LAWSUIT SHOULD BE STAYED WHEN A RECIFICATION PROCEEDING IS FILED PRIOR TO THE LAWSUIT."

The Delhi High Court had the chance to deal with the issue in the 1972 Kedar Nath v Monga Perfumery & Flour Mills case, under the 1958 act. Refusing a stay, the judge held that when no rectification proceedings are pending at the time the lawsuit is filed, the court may adjourn the lawsuit to enable the defendant to apply for rectification upon being satisfied that the contention of invalidity is bona fide and prima facie sustainable.

In the 1985 Elofic Industries (India) v Steel Bird Industries et al case, the Delhi High Court held that applying for rectification simultaneously with the filing of a statement of defence in the lawsuit, without raising an issue regarding invalidity, constituted compliance with Section 111 of the 1958 act. Hence, the court stayed the lawsuit.

The dictum in Elofic Industries was, however, not followed by the Division Bench of the Gujarat High Court in the 1998 Patel Field Marshal Agencies v P.M. Diesels Ltd case. In this case, the court upheld the view expressed in Kedar Nath.

Also, the Delhi High Court did not follow Elofic Industries in the 2006 AstraZeneca UK Ltd. & Anr. v Orchid Chemicals & Pharmaceuticals Ltd case. The court (taking note of Kedar Nath and Patel Field Marshal) concluded that rectification could not be filed during pendency of a lawsuit unless the court was prima facie satisfied about the plea of invalidity, and accordingly, declined to stay the lawsuit. This was upheld by the Division Bench.

On the other hand, the Division Bench of the Madras High Court, in the 2010 B. Mohamed Yousuff v Prabha Singh Jaswant Singh case, opined that the requirements envisaged in Section 124 of the 1999 act, i.e. raising an issue, adjourning a case and a prima facie satisfaction were not preconditions for filing a rectification during pendency of a lawsuit, but for grant of stay.

To compound the variance, the Division Bench of the Delhi High Court in the 2010 Puma Stationer P. Ltd and Anr v Hindustan Pencils Ltd case, followed Elofic Industries.

The circuit bench of the IPAB, which convenes in different states, has been affected by the varying views since it has to follow decisions of the jurisdictional High Court. In Delhi, the IPAB has been following AstraZeneca UK Ltd. and dismissing rectification proceedings filed without seeking the prima facie satisfaction of the court, whereas in Chennai, it is following Mohamed Yousuff.

The IPAB’s dilemma is apparent from the 2010 Kamadhenu Realtors Pvt. Ltd. v Kamadhenu Ispat Limited case. In this case, the IPAB observed that the prima facie satisfaction of the court is not necessary for filing a rectification, however, as it is bound by the observations of the Delhi High Court in AstraZeneca UK Ltd it dismissed the rectification. Interpretation of Section 124 remains a grey area requiring a ruling from the Supreme Court of India. Until then, litigants will have to follow the view applicable in the relevant jurisdiction.

J. V. Abhay is a managing associate at Remfry & Sagar. He can be contacted at: remfry-sagar@remfry.com

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Adrian Tapping at atapping@newtonmedia.co.uk