*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ IA.No. 6872/2008 in CS(OS) 1073/2008
% Date of decision: 03.10.2008
SUN PHARMACEUTICALS INDUSTRIES .......Plaintiff
LIMITED
Through: Mr Hemant Singh, Advocate.
Versus
CIPLA LIMITED ......Defendant
Through: Ajay Sahni with Ms Vrinda,
Advocates.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may
be allowed to see the judgment? Yes
2. To be referred to the reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
RAJIV SAHAI ENDLAW, J.
1. Though the plaintiff has instituted the suit for permanent injunction restraining infringement of trade mark THEOBID in relation to medicinal and pharmaceutical preparation and passing of by using the trade mark THEOBID-D, also in relation to medicinal preparations, the counsel for the plaintiff for interim relief has argued only on the basis of infringement of registered trade mark and not on the basis of passing of.
2. The first question to be decided therefore is whether, prima facie, the plaintiff is the registered proprietor of the trade mark and entitled to maintain an action for infringement. The question has IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.1 of 17 arisen because the trade mark is stated to be registered in the name of M/s Natco Fine Pharmaceuticals Private Limited vide registration No. 440830 dated 26th July, 1985 and valid till 26th July, 2016; that the said trade mark was assigned to the plaintiff alongwith its goodwill vide deed of assignment dated 31st October, 1998. The plaintiff claims to have applied in Form TM 24 dated 25th July, 2000 to the Registrar of Trade Marks for entering the name of the plaintiff as the subsequent proprietor of the said trade mark.
Section 45 of the Trade Mark Act, 1999 is as under:
"45. Registration of assignments and transmissions - (1) Where a person becomes entitled by assignment or transmission to a registered trade mark, he shall apply in the prescribed manner to the Registrar to register his title, and the Registrar shall, on receipt of the application and on proof of title to his satisfaction, register him as the proprietor of the trade mark in respect of the goods or services in respect of which the assignment or transmission has effect, and shall cause particulars of the assignment or transmission to be entered on the register:
Provided that where the validity of an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the assignment or transmission until the rights of the parties have been determined by a competent court.
(2) Except for the purpose of an application before the Registrar under sub-section (1) or an appeal from an order thereon, or an application under section 57 or an appeal from an order thereon, a document or instrument in respect of which no entry has been made in the register in accordance with sub-section (1), shall not be admitted in evidence by the Registrar or the Appellate Board or any court in proof of title to the trade mark by assignment or transmission unless the Registrar or the appellate Board or the court, as the case may be, otherwise directs."
The same corresponds to Section 44 of the Trade and Merchandise Marks Act, 1958 IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.2 of 17
3. It is contended by the counsel for the defendant on the basis of -
a) Section 2(1) (v) defining registered proprietor in relation to a trade mark, as meaning the person for the time being entered in the register as proprietor of the trade mark;
b) Section 28 providing that the registered proprietor of the trade mark shall have the exclusive right to the use of the trade mark and to obtain relief in respect of infringement thereof;
c) Section 29 also referring to a Register Trade Mark; and
d) Section 45(2) prohibiting the court from admitting into evidence any document as proof of assignment of trade mark unless the same is registered.
that the plaintiff inspite of assignment deed in its favour but without being registered with the Registrar as the proprietor of the trade mark is not entitled to maintain an action for infringement of the registered trade mark.
4. Reliance in this regard is placed by the counsel for the defendant on Soundarapandian Match Works v M Jayarama Chetty PTC (Suppl) (2) 145 (Mad) and Shaw Wallace & Co Ltd v Superior Industries Ltd 2007 (35) PTC 782 (Del).
5. In the first of the aforesaid judgments, a learned Single Judge of the Madras High Court held that having regard to the rigour of Section 44 of the Old Act, as long as the registration of the assignment has not been completed, the assignee cannot seek to exercise any right. It was held that since the Registrar is entitled to refuse to Register the assignment, it cannot be known till the IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.3 of 17 Registrar has passed the order as to whether the registration would be effected or not. It was further held that without the registration, the document of assignment is inadmissible to prove the title to the trade mark by assignment. It was thus held that till such registration, there is no right in the assignee to prevent anyone else. I may mention that in that case the assignee had not moved the Registrar to accept the assignment. In the present case, the application of the plaintiff for registration is pending since the year 2000. I find that a Single Judge of Bombay High Court also, in Ratansi Mulji v Vinod Ratilal Gandhi AIR 1991 Bom 407 quashed prosecution for unauthorized use of Trade Mark at the instance of a person, assignment in whose favour had not been registered. It was observed that without registration of assignment, no rights can be pleaded on the ground that the trade mark have been assigned or transmitted.
6. In Shaw Wallace & Co (supra) an application for impleadment of the assignee was under consideration. This court held that till the time the Registrar, Trade Mark, does not record the title in favour of the assignee, the deed of assignment cannot be admitted in evidence. However, the assignee was still impleaded as a party with direction to file the registration as and when accorded by the Registrar.
7. Per contra, the counsel for the plaintiff has relied upon M/s Modi Threads Limited v Som Soot Gola Factory AIR 1992 DELHI 4 and Grandlay Electricals (India) Ltd v Vidya Batra 1998 PTC (18) Delhi wherein it has been held that even if the IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.4 of 17 application for getting transferred the registered trademark in the office of the Registrar is pending, that does not debar the party from protecting the violation of the trademark at the hands of unscrupulous persons by filing an action in court of law for injunction. It was held that during the interregnum period when the application is kept pending for consideration by the Registrar of Trade Marks, dishonest persons cannot be allowed to make use of the said trade mark and to illegally enrich themselves. It was further held that the title accrues on the execution of the assignment deed and all other follow up action which are required to be taken under the Trade Marks Act do not change the title already acquired in this respect. In the aforesaid two judgments, it was also held that if in spite of the party having applied to the Registrar of Trade Marks, no action is taken by the Registrar, the party cannot be blamed therefor. Of course, in neither of the said two judgments, the provisions of Section 45(2) or of Section 2 (1)
(v) or of Section 28 or Section 29 of the Trade Marks Act were noticed or discussed. Thus, it cannot be said that the reasoning which prevailed with the Madras High Court to hold that till the date of transfer in the office of the Registrar, the party cannot claim to be the registered proprietor of the trademark, has been considered by this court.
8. I, however, find that not only in the aforesaid two cases, recently also another Single Judge of this Court in Astrazeneca UK Ltd. and Anr. v. Orchid Chemicals and Pharmaceuticals Ltd 2006 PTC 733 Delhi has also taken the same view and held that the rights in the trademark come on the basis of assignment deeds and the plaintiffs cannot be denied the rights in the trade mark which IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.5 of 17 they have got on the basis of the assignment deeds in their favour on the ground that in the records of the Registrar of Trade Marks, the trade mark is still shown in the name of the assignor.
9. Though the reasoning given by the Madras High Court appears to be attractive, especially in view of the peremptory language of Section 45(2) prohibiting the court from admitting into evidence the deed of assignment unless registered by the Registrar but I am inclined to follow the same reasoning as consistently followed by this court, for two reasons. Firstly, the Apex Court also in Collector of Central Excise v. Vikshara Trading and Invest. P. Ltd 2003 (27) PTC 603 SC, though not directly concerned with the issue, held:
"when as a matter of fact it is held that there was an assignment in favour of the first respondent and that fact was not in serious dispute, the mere fact that the assignment was not registered, could not alter the position."
I am conscious that the aforesaid observation by the Apex Court may not be construed as a ratio laid down by the Apex Court but the same shows the preference by the Apex Court also, of the view taken by this court rather than of the view taken by the Madras High Court.
10. I also find that the Madras High Court in judgment (supra) did not consider earlier judgment of its Division Bench in T.I. Muhammad Zumoon Sahib v. Fathimunnissa AIR 1960 Mad 80 holding that registration of assignment is not a condition precedent to an action for infringement by the assignee and an assignee of IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.6 of 17 registered trademark will not be disentitled to an action for infringement on the ground that the assignment was not registered. Thus it cannot really be said that the view of the Madras High Court is different from consistent view of this court.
11. I also find that under Section 2(1)(w) a registered trade mark is a trade mark which is on the Register and is in force. Registered trade mark is thus different from registered proprietor. Assignment under Section 2(b) is an assignment in writing by act of parties concerned. Assignment does not require registration. The Register of Trade Mark under Section 6 is to contain trade marks with the name etc of proprietor. Section 37 empowers the person entered in the Register as proprietor of trade make to assign the same. Section 38 makes the trade mark a tradeable property/commodity subject to restrictions in Sections 40 to 44. Thus registered trade mark is different from proprietor thereof. Thereafter, Section 45(1) provides "where a person becomes entitled by assignment ....to a registered trade mark, he shall apply in the prescribed manner to the Registrar to Register his title....." meaning thereby that assignment of title in registered trade mark is complete on assignment within the meaning of Section 2(b), i.e., on writing between the assignor and the assignee. For assignment to be complete, the Registrar is not involved. It is further borne out from language supra of Section 45(1) that the assignee acquires title to registered trade mark on assignment and not by registration. Registration is of title acquired by assignment. The inquiry which a Registrar is to make before such registration of title acquired by assignment is of satisfaction of proof of title and as to disputes if any as to assignment. This inquiry is limited to this IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.7 of 17 extent only in contradistinction to inquiry which the Registrar is to make before registering a trade mark. A dispute as to assignment can be raised by the assignor or by some person claiming prior assignment and not by strangers or by persons claiming adversely to the assignor.
12. It follows that the assignee immediately on assignment i.e., by writing acquires title to the registered trade mark. Registration under Section 45(1) is "on proof of title". Thus title exists in assignee even before registration under Section 45(1).
13. The next question which arises is, if title in registered trade mark vests in assignee, after assignment and before registration, who is entitled to exercise rights under Section 28 as registered proprietor. If the interpretation canvassed by defendant herein is to be adopted it will amount to allowing a person who is divested by assignment of title to registered trade mark to nevertheless continue exercising such rights; it would play havoc with assignability and trading in trade marks, expressly permitted under the Act. If the person in whom title has vested by assignment, is held to be not entitled to exercise such rights owing to non registration, the same result will follow, besides giving a premium to third parties. In that situation, in the interregnum there will be none to enforce rights in the registered trade mark. "Registered proprietor" in Section 28, rather than adopting a pedantic interpretation has to be interpreted as including a person having title as registered proprietor by way of assignment or transmission.
IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.8 of 17
14. It is also worth noting that what appears to have prevailed with the Madras High Court was the inaction of the plaintiff therein to have applied to the Registrar. In the present case, however, the plaintiff had applied for registration as far back as in the year 2000. There is nothing to show that the plaintiff is in any way to blame for the Registrar having not decided either way on the application of the plaintiff. In the circumstances the maxim actus cureae neminem gravabit - an act of court shall prejudice no man and lex non cogit ad impossibilia - the law does not compel a man to do that which he cannot possibly perform, would also become applicable. The plaintiff cannot be made to suffer for the actions of the Registrar. It has been held in A.P. Electricity Regulatory Commission v R.V. K. Energy Pvt Ltd JT 2008 (7) SC 138: Manu/SC 2615/2008 that these principles apply to quasi judicial bodies as well. It is also significant that the registration, if affected shall date back to the date of the application.
15. Secondly and more importantly, though Section 45(2) couched in peremptory language, is however subject to a direction to the otherwise of the court. The ultimate decision, therefore, is of the court, whether to admit into evidence or place reliance on any document of assignment or transmission of trade mark, inspite of the same being not entered in the Register. The legislature has thus after laying down the general rule of an unregistered document of assignment being not admissible in evidence, still left the discretion in the court, to be of course exercised in accordance with law and depending on facts and circumstances of each case. Section 45(2) appears to have been inserted more for the reason of ensuring the enforcement of Section 45(1). In the absence of Section 45(2), IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.9 of 17 assignees of registered trade mark would not have bothered to apply for registration with the Registrar and which would have led to disputes as to who is the registered proprietor. It is in the nature of Section 35 of the Stamp Act prohibiting the courts from admitting into evidence documents not duly stamped. However, the intent there also is not to extinguish the rights under the documents but only to ensure collection of stamp duty. This provision is unlike that of Registration Act, whereunder there can be no conveyance of title without a registered document. For the same reason, the latter part of Section 45(2), after providing for the prohibition provides "unless.... the court otherwise directs." Seen in this light, the contention of the counsel for the plaintiff that there can be no hiatus and the title as registered proprietor cannot remain in abeyance is well founded.
16. I thus find that the plaintiff notwithstanding being not registered is entitled to exercise rights as a registered proprietor of trade mark THEOBID.
17. The mark adopted by the defendant is identical to the plaintiff's registered trade mark. The counsel for the defendant, however, contends that the plaintiff is not entitled to the interim relief for the reason of having approached this court with unclean hands. It is stated that the plaintiff had approached this court with a case that it/its predecessor had extensively used the said trade mark. However, upon the defendant challenging the said position, the plaintiff has given up the said case. It is further urged that the essence of the mark is in use thereof and without the plaintiff or IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.10 of 17 anyone else using the trade mark, no injunction ought to be granted in favour of the plaintiff especially when the defendant has filed documents showing extensive use of the mark for the last several years. The counsel for the defendant has in this regard relied upon the Division bench judgment of this court in Veerumal Praveen Kumar v Needle Industries (India) Ltd & Another 2001(21) PTC 889 (Del).
It is further argued that when the defendant is in a position to compensate the plaintiff and has been in use of mark since long, no injunction should be granted. Judgments have been cited on this aspect.
18. As far as the argument of exercise of discretion in favour of plaintiff is concerned, it does not appear that the plaintiff approached the court with unclean hands. The plaintiff pleaded that the trademark had been extensively used by its predecessor but notwithstanding the plaintiff claiming assignment in 1998, it was pleaded that the plaintiff had been using the mark since January 2008 only. In replication the plaintiff clarified that the plaintiff had reason to believe that its predecessor had used the trade mark since 1985 but the plaintiff was not handed over any evidence to that effect. The plaintiff for the purposes of interim relief gave up the said ground. In the circumstances I do not find plaintiff guilty of any such conduct, as to be disentitled to interim relief.
19. The next question is with respect to use of the Trade Mark. Even as per the plaintiff, the plaintiff after assignment in 1998, IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.11 of 17 started using the mark only in January 2008. The defendant contends that in fact there is still no use and transactions of sale alleged are sham, being to share holders of plaintiff. Whether a registered owner of trade mark by disuse is disentitled to restrain its infringement. Trade Mark in Section 2(1) (Zb) is defined, inter alia, as mark "capable" of distinguishing goods of one person from another; paragraphs (i) and (ii) thereof contain the expression "used". However, in the present case the trade mark is registered and under Section 31, registration is prima facie evidence of validity. The other relevant provision is Section 47 which empowers the Registrar to take off the mark from Register if the same was registered without bonafide intention to use or if there has been no bonafide use of trade mark. Otherwise, Sections 28 and 29 do not make use of registered trade mark as a precondition to obtain relief against infringement. The scheme of the Act thus appears to be, to vest jurisdiction for removal from Register on the ground of non user, in the Registrar. In my view, if a defendant in a suit for infringement, without seeking remedies under Section 47 before the Registrar, is permitted to set up pleas of non use, the same will undermine the efficacy of Registration and the presumption of validity of registration under Section 31 of the Act. The Apex Court in American Home Products Corporation v Mac Laboratories Pvt Ltd AIR 1986 SC 137 has held that in a proceeding under Section 47, the burden of proving the facts is on the person who seeks to have the trade mark removed from the Register. The Apex Court in this case has also dealt in extenso with the subject of trafficking in trade marks. Even in In Re American Greetings Corporation Application (1983) 2 All E.R., 609 quoted with approval by Apex Court, Lord Brightman of the House of Lords IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.12 of 17 (1984) 1 All E.R. 426 held that the courts have to delineate trafficking in trade marks which is forbidden - only that is forbidden which is dealing in trade mark primarily as a commodity in its own right and not primarily for the purpose of identifying or promoting merchandise in which the proprietor of the mark is interested - if there is no real trade connection between the proprietor and the goods, there is room for conclusion that transaction is of trafficking. The law laid down thus appears to be that trade mark cannot be got registered and held by persons as "investors" only and with no intention whatsoever to use the same in connection with any goods and services. Even though I feel that in present times of encouraging creativity and rights in "abstract properties" viz in domain names, there should be no bar to professionals / intellectuals creating rights in marks and being permitted to profiteer from them and there is a need for re-think on this position, I find that even within the frame work of the existing law, in the present case, there is sufficient trade connection between the registered trade mark and the business/activities of the plaintiff and the plaintiff cannot be termed as a meer traffickeer in the trade mark. The Apex Court itself noted the complexities and delays in modern times in starting a business and without the mark being taken off the Register, I find that action for infringement of registered trade mark cannot be defeated for disuse. We have in recent times also seen new scientific research finding well known brands in the field of pharmaceuticals to be harmful and the said research findings being reversed after a decade or more. It would be travesty to allow to be extinguished rights in such well known brands in the interregnum. Such rights have come to be known as "intellectual properties" and there is no reason why facets of IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.13 of 17 tangible property which can be bought and retained by persons who have no use therefor and merely as investors, ought not to apply to "intellectual property" as well. In present day times of surrogacy, when the child may not belong to the mother from whose womb born and of sale for premium of automobile number plates, there is no reason why insistence on owners using or intending to use the mark or why restrictions in the name of trafficking, ought to continue vis-à-vis trade marks.
20. I also do not find the registered trade mark to have been abandoned in the present case. It has been traded and purchased for consideration by the plaintiff. The plaintiff applied for registration under Section 45(1). The plaintiff opposed the registration sought by the defendant and has instituted the present suit restraining infringement. Just like a trade make can be used by advertising, so is it being used in the present case by pursuing registration and seeking protection thereof. Section 2(2) of the Act in clause (b) permits use of printed representation of mark also, not necessarily for sale of goods.
21. In Veerumal Praveen Kumar (supra) the Division Bench found a case of abandonment and no likelihood of deception. However, in the present case the plaintiff has been exercising rights with respect to the mark and has also pleaded sales thereunder w.e.f. January, 2008. In these circumstances, the principles laid down by Division Bench are not applicable. The plaintiff as registered owner cannot be injuncted. The result would be the existence in the market of different products under IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.14 of 17 the same trade mark and which cannot be permitted. The plaintiff in the present case has claimed use and expressed intent to use and the correctness thereof is to be tested in trial and at this stage the rights of the registered owner are to be protected. The Apex Court in Ruston & Hornsby Ltd. v. The Zamindara Engineering Co AIR 1970 SC 1649, relied on by the counsel for the plaintiff, held that an action for infringement of trade mark is not dependent upon the plaintiff's use thereof and is a statutory right dependent only on the validity of the registration. A Single Judge of this court in Polson Ltd v Polson Dairy Ltd 56 (1994) DLT 102 discussed various judgments of Indian and Foreign Courts, the preponderance of which appears to be that a break in user of trade mark does not destroy its reputation and the mark if distinctive survives and that if the registration of the mark exists rightly or wrongly on the Register of trade marks, the court has no right to ignore the same.
22. The counsel for the defendant has also contended that since the defendant has been extensively using the mark for long ( and documents with respect to which have been filed) the balance of convenience is not in favour of the plaintiff and in merely directing the defendant to compensate the plaintiff for damages if ultimately succeeds. However, the same would again be doing violation to the language of the statute. If a registered proprietor is entitled to maintain an action for injunction and found entitled to injunction, the injunction ought not to be denied for the reason of the alternate relief of directing accounts to be kept. The infringement of rights in a trademark can never be sufficiently compensated and there is a possibility of great injury being done to the mark if the defendant is permitted to continue using the same. Moreover in a case as the IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.15 of 17 present where the registered owner as well as another are both claiming user, the balance of convenience is in favour of registered user. I find it more so since the defendant itself is an assignee having acquired the unregistered mark only in 2007. The defendant before acquiring rights is deemed to have made enquiries with the Registrar and is deemed to be in the know of the mark being registered. The defendant thus has no equities in its favour. Moreover, as aforesaid the plaintiff as registered owner cannot be injuncted and two products with same mark in the pharmaceutical sector cannot be permitted.
23. The counsel for the defendant has also argued that Section 12 of the Act permits concurrent registration. It is also argued that the plaintiff itself is to blame for its application pending since 2000; it is orally argued that there could be no question of assignment "with goodwill" in favour of plaintiff as the assignor of plaintiff was itself not using the trade mark and the plaintiff has applied in wrong form to the Registrar, hence the delay. I find that if the defendant had any grievance with respect to any of these aspects, the defendant ought to have approached the Registrar. The defendant without doing so, cannot raise such pleas which are in the domain of Registrar, when an action for infringement is brought against it.
24. I find plaintiff entitled to interim order. The application is allowed. The defendant, its directors, assignees, distributors, dealers are, during the pendency of suit restrained from manufacturing, selling or dealing in medicinal preparations under IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.16 of 17 the trade mark THEOBID-D or any other trade mark as may be deceptively similar with trade mark THEOBID of the plaintiff. However, in view of prima facie extensive use by defendant since 2007, and so as to enable the defendant to without disturbing its business, effect the change, this order shall be operative w.e.f., one month hereof.
RAJIV SAHAI ENDLAW (JUDGE) October 03, 2008 M IA.No. 6872/2008 in CS(OS) 1073/2008 Page No.17 of 17