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Infringement of trademarks takes various forms such as counterfeits and cybersquatting. Another way of infringement is when a corporate name is identical with or too nearly resembles another trademark.
The provisions of sections 20 and 22 of the erstwhile Companies Act, 1956 was amended vide Trademarks Act, 1999, to recognise bona fide rights of registered trademark proprietors and to provide safeguards against infringements.
Section 20 provided for the government not to allow companies to be incorporated with names that closely resembled trademarks. Section 22 carried the intention further and empowered the government to pass orders either suo moto or on application made by a registered proprietor, against companies that had been incorporated or had come into existence with a name similar to that of registered trademarks.
Position under Companies Act, 2013
With the coming into force of the Companies Act, 2013, sections 4 and 16 correspond to the erstwhile sections 20 and 22 of the previous act. Section 4(2), empowers the Registrar of Companies to preclude companies from incorporation of or registration with names, the use of which constitutes an offence under any law.
Section 4 read with rule 8(2) of the Companies (Incorporation) Rules 2014 stipulates that where the name of a new company or an existing company that proposes to change its name, includes a trademark, then such corporate names are undesirable names and incapable of being reserved as a corporate name.
"When the proposed name is identical to a trademark on the record of the registry, the Registrar denies approval of the proposed name."
Prior to grant of approval for reserving a name, the Registrar conducts a search in the database of the Indian Trademarks Registry and when the proposed name is identical to a trademark on the record of the registry, the Registrar denies approval of the proposed name irrespective of the difference in the line of business activity.
The aforesaid process curbs incorporation or change of a company name that infringes on trademarks to a large extent. In addition, section 16 provides remedy to registered trademark proprietors to make an application to the government against a company incorporated/registered with a name identical or similar to its registered trademark, within three years of incorporation of or change of name of the company, and seek a direction for rectification of name where such company’s name is identical with or too nearly resembles a registered trademark.
Based on an order, the company shall take necessary corporate actions to change its name within a period of six months of such direction. The new act also has penal provisions for failure to comply with the direction and also for repeated defaults.
The new act has brought down the prescription to registered proprietors under section 16 to three years of the incorporation of or change of name of company, as against the five years of coming to the notice of the registered proprietor under the old act. The powers granted to the government here are delegated to the Regional Director, in the Ministry of Corporate Affairs.
The power to seek rectification of company name under section 16 of the new act is an additional remedy, and is without prejudice to a registered proprietor’s right to file an infringement suit against infringing corporate name under section 29(5) of the Trademarks Act. Hence, even after the lapse of the three-year limitation period, a proprietor can file an infringement action under section 29(5) of the Trademarks Act.
For an infringement action to be successful under section 29(5) the following three factors must co-exist:
The plaintiff’s mark is a registered trademark.
The defendant is using the plaintiff’s registered trademark as part of his trade name or business.
The defendant’s business is in respect of goods or services in respect of which the trademark is registered.
The above principles have been laid down and confirmed by various High Courts in Kamdhenu Ispat v Kamdhenu Pickles and Spices and Ors decided in 2010, Skipper v Akash Bansal and Ors decided in 2017 and Exxon Mobil Corporation and Ors v P.K. Sen decided in 2018.
Brand owners are granted rights under the realm of company law to safeguard their trademarks from being registered as a corporate name by third parties, and this can be pursued by them as an effective measure to thwart infringement.
NV Saisunder is a fourth-generation lawyer and leads the technology, media and IP law practice at Eshwars. His core competency lies in drafting, reviewing, vetting and negotiation of all kinds of IT, telecommunications, film and media-related contracts. He can be contacted at: firstname.lastname@example.org
Srividya Sundaresan heads the trademark and copyright practice of the firm and has over seven years of experience in this field. She specialises in advising domestic and international clients on the protection and enforcement of IP rights. She can be contacted at: email@example.com
Eshwars, trademark infringement, counterfeits, cybersquatting, grant of approval, Ministry of Corporate Affairs, plaintiff, brand owners, third parties