Abbott Healthcare Pvt Ltd vs Raj Kumar Prasad & Ors
2017 Latest Caselaw 6920 Del

*         IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                     Date of decision: 4th December, 2017
+                            CS(OS) 3534/2012
          ABBOTT HEALTHCARE PVT LTD                  ..... Plaintiff
                      Through     Mr.Ranjan Narula and Ms. Astha
                                  Joshi, Advocates
                             versus
          RAJ KUMAR PRASAD & ORS                 ..... Defendants
                       Through  Mr. Mohan Vidhani and Mr.
                                Ashish Singh, Advocates
          CORAM:
          HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
 IA No. 14337/2017 (under Section 124 of the Trade Marks Act by
the plaintiff) in CS (OS) No. 3534/2012.

1.

The counsel for the defendants appears on advance notice and seeks time to file reply.

2. It has been enquired from the counsel for the defendants as to what is there to be pleaded factually for a reply to be required.

3. The counsel for the defendants agrees that his opposition to the application is on legal grounds only; however, he still seeks adjournment stating that he is not prepared for the arguments.

4. There is no reason for the counsel to appear unprepared before the Court.

5. The counsel for the defendants states that even if he had not appeared on advance notice, the Court would have issued notice.

6. That was for the counsel to decide; he cannot on the one hand earn appearance and on the other hand ask the Court to treat him as not

appearing. Even otherwise, once the practice of serving of advance copy has been enshrined in the Rules, if the Court finds that the opposite party, in spite of service of advance copy, fails to appear and the application can be disposed of without issuing notice, the court is entitled to do so.

7. The counsel for the defendants then contends that in the present suit, though the plaintiff had knowledge of the registered trade mark of the defendants, the rectification proceedings before the Registrar of Trade Marks were not instituted prior to the institution of the suit and the rectification proceedings have been instituted after the institution of the suit and without seeking the permission of this court and the same do not entitle the plaintiff to seek stay of its own suit.

8. The counsel for the plaintiff states that though it was the law earlier but the Full Bench of this Court in Data Infosys Ltd. Vs. Infosys Technology 2016 (65) PTC 209 (Del) has held otherwise and has drawn attention to paras 31 & 32 of the judgment as reported in MANU/DE/0283/2016.

9. I have enquired from the counsel for the plaintiff, whether the plaintiff in the plaint has pleaded the invalidity of the trademark of the defendants.

10. The counsel for the plaintiff replies in the affirmative and has drawn attention to para 13 of the plaint. The plaintiff is however found to have therein pleaded having already initiated the rectification proceedings.

11. The counsel for the defendants clarifies that the plaint now on record is the amended plaint and the plaintiff in the plaint as originally

filed pleaded that it intended to initiate rectification proceedings.

12. I have next enquired from the counsel for the plaintiff, whether issues have been framed in the suit.

13. Issues are found to have been framed in the suit on 21st March, 2016 but the plaintiff is not found to have pressed any issue qua the validity of the registration of the trade mark of the defendants.

14. Section 124 of the Trade Marks Act, 1999 is as under:

―124. Stay of proceedings where the validity of registration of the trade mark is questioned, etc.--(1) Where in any suit for infringement of a trade mark--

(a) the defendant pleads that registration of the plaintiff's trade mark is invalid; or

(b) the defendant raises a defence under clause (e) of sub-section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant's trade mark, the court trying the suit (hereinafter referred to as the court), shall,--

(i) if any proceedings for rectification of the register in relation to the plaintiff's or defendant's trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings;

(ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff's or defendant's trade mark is prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the Appellate Board for rectification of the register.

(2) If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub-section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings.

(3) If no such application as aforesaid has been made within the time so specified or within such extended time as the court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case.

(4) The final order made in any rectification proceedings referred to in

sub-section (1) or sub-section (2) shall be binding upon the parties and the court shall dispose of the suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark. (5) The stay of a suit for the infringement of a trade mark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction directing account to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit.‖

15. The plaintiff, though prior to the institution of this suit had not instituted any proceeding for rectification of the registered trade mark of the defendants, but in the plaint has pleaded that the trade mark of the defendants has been registered in bad faith and is invalidly remaining on the Register. The plaintiff, after the institution of the suit and without raising an issue regarding invalidity of the registration of the defendants' trade mark, filed rectification / cancellation proceedings before the Intellectual Property Appellate Board (IPAB) for removal of the registration in favour of the defendant and has thereafter filed this application for stay of proceedings in this suit.

16. I have wondered whether to such a situation Section 124 supra which contemplates only two situations, i.e. of proceedings for rectification of the Register with respect to the defendants' trade mark pending since prior to the institution of the suit and if no such proceedings are pending at the time of institution of the suit, initiating such proceedings after satisfying the Court that the plea regarding invalidity of registration of defendants' trade mark is prima facie tenable and raising an issue regarding the same, would apply. In the present case, neither were the proceedings for rectification pending prior to the institution of the suit nor did the plaintiff at the time of framing of issues

raise an issue regarding the invalidity of the registration of the defendants' trade mark.

17. The majority view in Data Infosys Ltd. supra did not consider such a contingency. However, the dissenting opinion, noticing such a situation, observed i) that there is nothing in Section 124 to suggest that either the plaintiff or the defendant is precluded from moving an application before the Registrar / IPAB for rectification, after the filing of the suit; ii) the scheme of Section 124(1)(i) appears to be, that the issue with regard to stay of proceedings in the suit for infringement of trade mark would be considered by the Court on the basis of the factual situation as it obtains when such consideration takes place; and, iii) therefore, if on the date of consideration of the said issue, proceedings for rectification of the registration in relation to plaintiff's or defendants' trade mark are pending before the Registrar or the IPAB, the Court shall stay the suit pending final disposal of such proceedings, irrespective of the fact that such rectification proceedings were initiated before, or after the filing of the suit.

18. However the dissenting opinion in Data Infosys Ltd. supra is not a precedent.

19. Without the said validity of the registration of the trade mark of the defendants being in issue in this suit, the case for staying proceedings in this suit, instituted prior to initiating the rectification proceedings, would not arise and once that is so, the court would also not be required to form a prima facie opinion with regard to the validity of the registration of the trade mark of the defendants.

20. I may, however, notice that it is the contention of the counsel for the plaintiff that the plaintiff has been granted interim injunction in this suit owing to the prima facie invalidity of the registration in favour of the defendant and the appeal preferred by the defendants to the Division Bench against the order granting interim injunction has also been dismissed.

21. The counsel for the plaintiff then contends that issues can be rectified.

22. Certainly yes, but the plaintiff has to apply therefor and it is felt that if oral request of the counsel for the plaintiff in this regard were to be accepted, such pre-mature applications will continue to be filed, wasting the time of the court.

23. The counsel for the plaintiff has then referred to para 25 of Patel Field Marshal Agencies Vs. P.M. Diesels Ltd. 2017 SCC OnLine SC 1388 to contend that first the Court has to form a prima facie opinion about the tenability of the issue of invalidity of the registration of a trade mark and then frame issue to the said effect.

24. Before considering the aforesaid argument, I need to notice that Supreme Court in judgment aforesaid has set aside the dicta of the Full Bench of this Court in Data Infosys Ltd. supra.

25. Supreme Court in the judgment aforesaid formulated the following question for consideration:

―In a situation where a suit for infringement is pending wherein the issue of validity of the registration of the trade mark in question has been raised either by the plaintiff or the defendant and no issue on the said question of validity

has been framed in the suit or if framed has not been pursued by the concerned party in the suit by filing an application to the High Court for rectification under Sections 111 read with Section 107 of the Trade and Merchandise Marks Act, 1958, whether recourse to the remedy of rectification under Sections 46/56 of the 1958 Act would still be available to contest the validity of the registration of the Trade mark.‖

and held that though the question arose in the context of the 1958 Act but continues to be a live issue in view of the pari materia provisions contained in the 1999 Act.

26. Supreme Court proceeded to answer the question formulated as under:

(i) that the 1958 and the 1999 Act suggest that if a proceeding for rectification of the Register in relation to the trade mark of either the plaintiff or the defendant is pending and a suit for infringement is filed wherein the said plea is raised either by the plaintiff or the defendant, the suit shall remain stayed;

(ii) that if no proceeding for rectification are pending on the date of filing of the suit and the issue of validity of registration of the plaintiff or the defendant trade mark is raised and the same is prima facie found to be tenable, an issue to the aforesaid effect shall be framed by the Civil Court and the suit will remain stayed for a period of three months from the date of framing of the issue so as to enable the concerned party to apply for rectification;

(iii) that if no such application for rectification is filed despite such order of the Civil Court, the plea with regard to validity

of registration of trade mark shall be deemed to have been abandoned and the suit shall proceed in respect of any other issue that may have been raised therein;

(iv) that the heading / title of Section 111 of the 1958 Act and Section 124 of the 1999 Act cannot be understood to be determinative of the true purport, intent and effect of the provisions contained therein;

(v) that the purport of the said provisions is that all questions with regard to the validity of a trade mark is required to be decided by the Registrar or the IPAB (under the 1999 Act) and not by the Civil Court;

(vi) that the Civil Court in fact is not empowered to decide the said question;

(viii) that the Acts mandate that the decisions rendered by the prescribed statutory authority i.e. IPAB will bind the Civil Court;

(ix) at the same time, both, the old and the new Acts go on to provide a different procedure to govern the exercise of the same jurisdiction in two different situations;

(x) that in case where the issue of invalidity is raised or arises independent of a suit, the prescribed statutory authority will be the sole authority to deal with the matter; however, in a situation where a suit is pending (whether instituted before or after the filing of a rectification application) the exercise

of jurisdiction by the prescribed statutory authority is contingent on a finding of the Civil Court as regards the prima facie tenability of the plea of invalidity;

(xi) that in a situation where the Civil Court does not find a triable issue on the plea of invalidity, the remedy of an aggrieved party would not be to move the IPAB for rectification but to challenge the order of the Civil Court in appeal - this is necessary to avoid multiple proceedings on the same issue and resultant conflict of decisions;

(xii) that the intention of Legislature is clear; all issues relating to and connected with the validity of registration have to be dealt with by the Tribunal and not by the Civil Court;

(xiii) that in cases where the parties have not approached the Civil Court, the statute provides an independent statutory right to an aggrieved party to seek rectification of a trade mark;

(xiv) that however, in the event the Civil Court is approached, inter alia, raising the issue of invalidity of the trade mark, such plea will be decided not by the Civil Court but by the Tribunal under the 1958 Act;

(xv) that the IPAB (under the 1999 Act) will however come into seisin of the matter only if the Civil Court is satisfied that an issue with regard to invalidity ought to be framed in the suit; once an issue to the said effect is framed, the matter will have to go to the IPAB and the decision of the IPAB will thereafter bind the Civil Court;

(xvi) that if despite the order of the Civil Court, the parties do not approach the IPAB for rectification, the plea with regard to rectification will no longer survive;

(xvii) that the Legislature, while providing consequences for non-

compliance with timelines for doing any act, must be understood to have intended such consequences to be mandatory in nature, thereby also affecting the substantive rights of the parties;

(xviii) that it is very much within the legislative domain to create legal fictions by incorporating a deeming clause and the Court will have to understand such statutory fictions as bringing about a real state of affairs between the parties and ushering in legal consequences affecting the parties unless there is anything to the contrary in the provisions of the statute;

(xix) that nothing exists in the Trade Marks Act to understand the provisions of Sections 111/ 124 of the 1958 / 1999 Act in any other manner except that the right to raise the issue of invalidity is lost forever if the requisite action to move the IPAB (under the 1999 Act) is not initiated within the statutorily prescribed time frame; thus by virtue of operation of the Act, the plea of rectification, upon abandonment, must be understood to have ceased to exist or survive between the parties inter se;

(xx) to permit the issue of rectification, once abandoned, to be

resurrected at the option of the party who had chosen not to pursue the same at an earlier point of time, would be to open the doors to reopening of decrees/orders that have attained finality in law, bringing about uncertainty if not chaos in the judicial determinations between the parties that stand concluded;

(xxi) such an interpretation would permit an aggrieved party to get over the operation of a statute providing for deemed abandonment of the right to raise an issue relevant, in fact, fundamental to the lis;

(xxii) the mandate of Sections 111 / 124 appears to be that if an aggrieved party does not approach the IPAB for a decision on the issue of invalidity of registration as provided for under Section 124 (1)(b)(ii) and Section 124 (2) & (3), the right to raise the issue of invalidity would no longer survive between the parties to enable the concerned party to seek enforcement of the same by recourse to or by a separate action under Sections 47 & 57 of the 1999 Act;

(xxiii) Section 124 of the 1999 Act nowhere contemplates grant of permission by the Civil Court to move the IPAB, for rectification; the requirement of satisfaction of the Civil Court regarding the existence of a prima facie case of invalidity and the framing of an issue to that effect before the law operates to vest jurisdiction in the IPAB to deal with the issue of invalidity by no means tantamounts to

permission or leave of the Civil Court - it is the basic requirement to further the cause of justice by elimination of false, frivolous and untenable claims of invalidity that may be raised in the suit;

(xxiv) the provisions of either the 1958 or the 1999 Act cannot be construed to understand that the proceedings for rectification of Register on the one hand and those under Section 124 on the other hand would run parallelly; and,

(xxv) the jurisdiction of rectification conferred by Sections 47 and 57 of the 1999 Act is the very same jurisdiction that is to be exercised under Section 124 of the 1999 Act when the issue of invalidity is raised in the suit but by observance of two different procedural regimes.

27. I have analysed the dicta aforesaid of the Supreme Court in detail as surprisingly, neither the counsel for the plaintiff who though cited the same as also Data Infosys Ltd. point out that Data Infosys Ltd. had been overruled thereby, not the counsel for the defendants raise the same.

28. From the aforesaid analysis of the dicta of the Supreme Court in Patel Field Marshal Agencies supra, my view is re-enforced that without an issue having been urged and framed, this Court cannot in exercise of powers under Section 124 stay the proceedings in the suit as is the want of the plaintiff. It is only after an issue qua invalidity of registration is framed that the legislature has provided for stay of proceedings in the suit to avoid the Civil Court as well as IPAB both adjudicating the same question and to avoid duplicity / multiplicity. To the said extent, Section

124 is akin to Section 10 of the CPC albeit that even if proceedings before the IPAB have not been instituted prior to the institution of the suit, IPAB is given supremacy in deciding the question of rectification.

29. As far as the contention of the counsel for the plaintiff, that first the Court has to form a prima facie opinion about the maintainability of the issue of invalidity of the registration and then frame an issue with respect thereto is concerned, issues as per Order XIV of the CPC are to be framed on substantial questions of law and fact arising for determination from the pleadings of the parties. Without a substantial question of fact and law emerging from the pleadings in the suit, even a plea of invalidity of registration, within the meaning of 124(1)(b) cannot be said to have been raised. From the conduct of the plaintiff of having not pressed for an issue qua invalidity of registration of the trade mark of the defendants, various inferences in law can be drawn including of either the plaintiff having not pleaded the invalidity of the registration of the defendants' mark or of the plaintiff having abandoned the said plea. I am unable to find para 25 of Patel Field Marshal Agencies supra laying down to the contrary; rather, the entire exercise contemplated in Section 124(1)(b)(ii) of forming a prima facie opinion and raising an issue regarding the same is to be simultaneously undertaken and the plaintiff as of now is found to have missed the bus.

30. However I refrain from rendering any final opinion since the counsel for the plaintiff has orally requested for amendment of issues and which request has been denied as aforesaid and the counsel for the plaintiff states that he will be filing an application therefor. It is felt that

rendering any final opinion at this stage may come in the way of the plaintiff making such an application if a right therefor vests in him in law.

31. For the aforesaid reasons, the application is dismissed as not maintainable with liberty however to the plaintiff to apply afresh if files an application for amendment of issues and if the same succeeds.

No costs.

RAJIV SAHAI ENDLAW, J.

4th DECEMBER, 2017 ‗mw'/gsr/pp