Sun Pharmaceuticals Industries ... vs Cipla Limited
2008 Latest Caselaw 1797 Del

     *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