The Author, Sujith Nair is an Advocate currently practicing at the Chambers of Adv. Rui Rodrigues, Bombay High Court.
I. Introduction
Section 28 of the Trade Marks Act, 1999 (hereinafter referred to as the “Act”) confers the right to exclusive use of the registered trade mark upon its proprietor. However, a bare reading of Section 34 of the Act will underscore the fact that the right conferred by Section 28 is not absolute, but rather it is subject to the vested rights of the person who has been in prior use of the same mark in relation to the same goods or services for which the mark is later registered by the other person.
II. Origin
Before we delve into the scheme of Section 34, it will be helpful to understand the origins of this provision. The Bombay High Court in Sunder Parmanand Lalwani v. Caltex (India) Ltd. noted that even prior to the passing of the first Trade Marks Act in England in the year 1875, any trader could acquire rights in a distinctive mark by simply using it in connection with his goods during the course of his trade. This right would be protected by law, and the said trader would be entitled to institute proceedings in a court of law for an injunction against any infringement of his rights in the mark. After the passing of the 1875 Act, one was also given the option to become the proprietor of a mark by registering it in accordance with the statute. However, the mode of acquiring proprietorship of a mark by "user" was still protected under the statute. Hence, "registration" under the statute was merely one of the ways of acquiring proprietorship of a mark, and it in no way superseded the rights of a person who had acquired proprietorship of an identical mark by "prior usage."
The scheme of India's Trade Marks Act, 1999 is based on the English Trade Marks law. This can be deduced from the fact that Section 28 of the Trade Marks Act, 1999, which confers the right of exclusive use on the registered proprietor, opens with the words "Subject to the other provisions of this Act," while Section 34 of the act, which saves vested rights of a prior user, commences with a non-obstante provision. Thus, the rights of a prior user are statutorily recognised to be higher than the rights of a registered proprietor. Before the codification of trade mark laws in India, the right in a trade mark was acquired only by its use thereof, as there was no provision for the registration of a trademark. This right has been preserved and recognized by Sections 27(2) and 33 of the 1999 Act.
III. Requirements
In Kamat Hotels (India) Ltd. vs. Royal Orchid Hotels Ltd. & Anr., after analysing the scheme of Section 34, the Bombay High Court comprehensively listed the various requirements that need to be met for a person to be able to claim protection under Section 34. These are as follows:
- The prior use of the mark must be in relation to the goods and services for which the mark has been later registered by the other person.
- The prior use of the mark must be continuous. The use cannot be isolated or intermittent. The mark must have been put to commercially continuous use in relation to the goods and services, and the mere adoption of the mark or issuance of an advertisement by the proprietor is not sufficient either.
- The proprietor claiming benefit/protection under Section 34 must have used the mark prior to the date of registration or use of the registered mark by the other person, whichever is earlier.
- The prior use must be by the proprietor himself or the predecessor-in-interest of the person claiming benefit/protection of Section 34.
Volume of sales and proof that a goodwill connecting the proprietor with his goods has resulted from the trade-mark being used during the course of trading of these goods are some other requirements mandated by other courts for a person to avail the benefits of Section 34.
IV. Implications
In dealing with the practical application of Section 34, the Supreme Court in Neon Laboratories Ltd. Vs. Medical Technologies Ltd. and Ors., held that the “first in the market” test must be employed by the courts while balancing the rights of the parties in dispute. In other words, even a registered proprietor cannot bring any action against a prior user of the mark if the prior user is able to demonstrate that they have been using the mark commercially and continuously from before the date of registration or use of the mark by the registered proprietor. In this context, it will be important to note that for a defence of prior use in an Interim Application for injunction, the defendant need not concretely establish the claim of prior use but only needs to set up a plausible defence of the same.
The registrar becomes bound to register the trade mark of the prior user even though the same mark has already been registered by another person, but who has started using the mark comparatively recently. Thus, prior registration of the mark is not a ground to deny the registration of a similar or identical mark in favour of the prior user.
On the other hand, a prior user can very well bring an action of passing off against a registered proprietor under Section 27(2) of the act. Section 27(2) commences with the words “Nothing in this Act shall be deemed to affect rights of action against any person for passing off...” Even the rights conferred by Section 28 on the registered proprietor cannot bar the action of passing off against him by an anterior user. Even the presumption of validity borne by the registration of a mark under the provision of Section 31 is susceptible to being rebutted and displaced by the over-riding effect of Section 27(2). Therefore, registration of a trade mark under the Act would be inconsequential in an action for passing off. Pertinent to this point is the fact that in an action of passing off against a registered proprietor, it is not enough for the registered proprietor to show that the registration of the mark by him was prior to its use by the plaintiff. He must also be able to adduce evidence of an anterior use of the mark by him to successfully resist an application of an interim injunction against him.
Regardless of an anterior use of the mark by a party, the party will not be said to be the "prior user" of the mark for the purposes of being termed the exclusive owner of the mark, unless they are able to substantiate that the mark has become distinctive or acquired a secondary meaning by virtue of being used in the course of their business.
V. International Prior Use
Can a party claim the benefits of prior use even if the use occurred outside of India's territory? The Delhi High Court in Lowenbrau AG and Ors. Vs. Jagpin Breweries Ltd. and Ors., answered this question in the affirmative. The court stated that this proposition cannot be answered with finality and each case must be tackled on its own merits and factual background. The final verdict will depend upon several factors, like the extent of the use of the mark in time, quantity, area of use, whether the mark has become common in trade, or of a geographical origin, etc. The court further held that national boundaries are getting diluted as the world shrinks to almost a global village. Indian companies are trying to enter international markets and foreign companies are eager to find headway in the untapped Indian market. Hence, the transnational nature of a trademark is losing its significance and the court cannot ignore the trans-border reputation of a company and its mark. In conclusion, the court held that prior use of marks in foreign markets must be recognised by Indian courts even though the products using these marks may never have been marketed and sold in India.
However, in this regard, the Supreme Court in Milmet Oftho Industries & Ors. Vs. Allergan Inc. cautioned against the prospect of multinational companies, who have no intention of marketing and selling their products in the Indian market, throttling Indian companies by prohibiting such domestic companies from selling their natively developed products in the Indian market under the banner of a mark which has been bona fide adopted, especially when these products have been first in the market.
VI. Conclusion
Hence, it can be concluded that though the rights of a registered proprietor are excusive, they are not absolute. His rights are not higher in order than the rights of a prior user and will always be subject to the rights of such a prior user. The prior user also has the right to prevent others from passing off their goods as his, which is a right that emanates from the common law and is independent from the rights conferred by the Trade Marks Act of 1999.
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