Introduction
Few trademark disputes in Indian legal history arise from as remarkable a set of circumstances as the one decided by the Supreme Court of India on May 10, 1996, in Cycle Corporation of India Ltd. vs. T.I. Raleigh Industries Pvt. Ltd. and Others. This case sits at the crossroads of trademark law, industrial licensing law, and the consequences of government nationalisation of private industry – a unique confluence that makes it a deeply instructive precedent not only for intellectual property lawyers but also for anyone seeking to understand how Indian courts balance commercial reality with statutory formality.
At the core of this case was a question that sounds almost paradoxical: can a company that manufactures goods and sells them in the market under a well-known brand name be considered a legitimate user of that brand, even if it never formally registered itself as a “registered user” under the applicable trademark statute?
And when a foreign trademark owner tries to have its mark removed from the Indian register on the ground that no one has been using it for over five years, can an Indian company resist that attempt by pointing to its own long history of actual use, use that was unregistered, unrecognised by the registry, but undeniably real and continuous on the ground?
Legal Framework Under the Trade and Merchandise Marks Act, 1958
The Trade and Merchandise Marks Act, 1958, which was the governing legislation at the time, provided in Section 46(1)(b) that a registered trademark could be removed from the register if, for a continuous period of five years or more up to one month before the date of the removal application, the mark had not been used in good faith.
Section 48 of the same Act created the concept of a “registered user”, someone other than the trademark proprietor who is formally registered to use the mark.
Section 46(3) carved out an exception, protecting proprietors who could show that non-use was due to special circumstances in the trade, not any intention to abandon the mark.
Key Statutory Provisions
| Provision | Subject Matter | Legal Effect |
|---|---|---|
| Section 46(1)(b) | Removal for Non-Use | A trademark may be removed if not used in good faith for a continuous period of five years or more. |
| Section 48 | Registered User | Permits a person other than the proprietor to use the trademark after formal registration as a registered user. |
| Section 46(3) | Special Circumstances Exception | Protects trademarks from removal where non-use results from special circumstances in trade and not abandonment. |
Central Issues Before the Supreme Court
- Whether actual commercial use of a trademark by an unregistered user could be treated as valid use for purposes of avoiding removal for non-use.
- Whether formal registration as a “registered user” was indispensable for such use to be recognised under trademark law.
- Whether long-standing and continuous market use could preserve the trademark despite procedural deficiencies.
- Whether the trademark proprietor could rely upon the statutory protection available under Section 46(3).
Importance of the Decision
The Supreme Court’s navigation through these provisions, against the backdrop of a nationalised Indian bicycle industry and a decades-long collaboration with a British company, produced a judgement of lasting significance.
The appeal was dismissed, and the High Court’s refusal to strike off the trademark from the register was upheld.
The decision remains important because it demonstrates how courts may look beyond mere procedural formalities and examine the commercial realities surrounding trademark use when determining whether a mark has genuinely been abandoned or continues to enjoy protection under law.
Factual and Procedural Background
The respondents, T.I. Raleigh Industries Pvt. Ltd and others, were connected to the well-known British bicycle brand “Raleigh”. Through their agents, they had registered the trademark “Raleigh” and 11 other trademarks, totalling 12 marks, under the Indian Merchandise Marks Act, 1889 (4 of 1889), and the Trade Marks Act, 1940 (5 of 1940). The Trade and Merchandise Marks Act, 1958 (43 of 1958), which came into force on October 3, 1958, repealed the predecessor Acts and is the statute under which this dispute was ultimately decided.
Origin of the Raleigh Trademark Arrangement
The chain of events that led to this case began as far back as November 3, 1948, when the respondents entered into an agreement with one Sudhir Kumar Sen to provide technical know-how to an Indian company that would be formed to manufacture bicycles and market them under Raleigh’s Indian trade marks.
Pursuant to this arrangement, a company called Sen Raleigh Ltd. was incorporated, which manufactured bicycles with technical assistance from the respondents and sold them under the Raleigh brand and trade marks belonging to the respondents.
- November 3, 1948: Agreement executed with Sudhir Kumar Sen for technical collaboration.
- April 24, 1954: Sen Raleigh was recorded as a permitted user of the trade marks.
- December 29, 1962: A further agreement provided that Sen Raleigh would be a registered user of the marks for a period extending up to 1976.
Government Takeover and Nationalisation
On September 8, 1975, Sen Raleigh Ltd was taken over by the Government of India under the Industrial (Development and Regulation) Act, 1951, commonly referred to as the IDR Act, and the Government assumed management of the company.
The agreement dated December 29, 1962, was modified, and the respondents were given the option to terminate it. A fresh agreement was then entered into on December 20, 1976, between the appellant, Cycle Corporation of India Ltd, into which Sen Raleigh had by then been merged by operation of the IDR Act following nationalisation, and the respondent, under which the appellant used the 12 trademarks as a registered user for a period of 5 years.
Events Leading to the Trademark Dispute
On March 28, 1978, a joint application signed by the respondent as proprietor and by Sen Raleigh Ltd as registered user was filed before the Registrar of Trade Marks.
On October 24, 1980, Sen Raleigh was formally nationalised and vested in the appellant corporation by publication of a notification under the IDR Act.
On March 5, 1982, the respondent wrote to the appellant stating that in the absence of a new agreement, they were instructing their advocates to prevent the appellant from using the trademark with effect from April 1, 1982.
Rectification Proceedings Before the High Court
On March 24, 1982, the appellant filed an application under Sections 32, 46, and 56 of the Trade and Merchandise Marks Act, 1958, before the High Court of Calcutta in Suit No. 266 of 1992, seeking to have the respondents’ trade marks removed from the register.
The appellant’s case was, in essence, that the
- Neither the respondents nor any registered user had used the trade mark for a continuous period of five years or longer.
- Further use by the respondents would be likely to deceive and cause confusion among the trade and public.
Simultaneously, on March 25, 1982, the appellant also filed an application for registration of three trade marks in its own favour.
However, by proceedings dated June 13, 1984, the Registrar of Trade Marks informed the appellant that the registered user applications were treated as abandoned because the appellant had failed to comply with statutory requirements.
Decision of the Single Judge
The learned single judge of the Calcutta High Court dismissed the appellant’s application by a judgement dated September 13, 1990.
The court held that:
- The expression “by any registered proprietor” in Section 46(1)(b) extends beyond the registered proprietor and the registered user to include any bona fide or authorised user.
- Special circumstances were available to the respondent as a defence for non-use even after 1979, since the supply of technical know-how by the respondent was not entirely absent after the termination of the collaboration agreement.
- The trade marks should not be rectified or removed from the register.
Accordingly, the Court declined to rectify the trademarks and refused to strike them off the register.
Division Bench Judgment
The Division Bench of the Calcutta High Court, in Appeal No. 13 of 1991, confirmed this decision by its judgement dated June 3, 1994.
The division bench held that:
- From October 25, 1980, onwards, the respondent had allowed and permitted the appellant to manufacture bicycles and pass off the goods under the respondent’s trademarks.
- Although the collaboration and registered user agreements had expired on October 31, 1981, no fresh agreement had been executed.
- There was no specific legal bar preventing an unregistered licensee from using a registered trade mark, provided there existed a connection in the course of trade between the licensor and the licensee.
- The non-registration of the user agreement by Sen Raleigh and the appellant resulted from the appellant’s own default.
- The appellant could not simultaneously seek rectification of the respondents’ marks while also applying for registration of trade marks in its own favour.
Appeal Before the Supreme Court
Aggrieved by the concurrent findings of the single judge and the division bench, the appellant approached the Supreme Court by way of special leave.
Key Dates and Events
| Date | Event |
|---|---|
| November 3, 1948 | Agreement with Sudhir Kumar Sen for technical know-how and use of Raleigh trade marks. |
| April 24, 1954 | Sen Raleigh is recorded as a permitted user of the trademarks. |
| December 29, 1962 | Agreement extending registered user rights up to 1976. |
| September 8, 1975 | The Government of India took over Sen Raleigh under the IDR Act. |
| December 20, 1976 | Fresh registered user agreement executed with Cycle Corporation of India Ltd. |
| March 28, 1978 | Joint application filed before the Registrar of Trade Marks. |
| October 24, 1980 | Sen Raleigh formally nationalised and vested in the appellant. |
| March 5, 1982 | Respondent sought to restrain further use of the trade mark from April 1, 1982. |
| March 24, 1982 | Rectification application filed before the Calcutta High Court. |
| March 25, 1982 | Appellant applied for registration of three trade marks. |
| June 13, 1984 | The registrar treated registered user applications as abandoned. |
| September 13, 1990 | The single judge dismissed the appellant’s application. |
| June 3, 1994 | The Division Bench affirmed the Single Judge’s decision. |
The Dispute
The dispute that came before the Supreme Court had three principal dimensions.
First Dimension: Bona Fide User of the Trademarks
The first was whether the appellant Corporation could be considered a “bona fide user” of the respondents’ trade marks for the purpose of Section 46(1)(b), notwithstanding that it was not a formally registered user under Section 48(1) of the Act, particularly after the expiry of the registered user agreement on December 20, 1981, and the abandonment of the joint application.
If the appellant were not a bona fide user, then the respondents too could not take credit for that use, and the five-year period of non-use might be established, which would then entitle the court to remove the mark.
Second Dimension: Special Circumstances Exception
The second dimension was whether the provisions of Section 46(3), the special circumstances exception, were available to the respondents to defend themselves against the non-use allegation.
The appellant argued that the respondents had not been using the marks as registered proprietors since April 20, 1954, and had failed to prove that they were prevented from using the marks for a period of five years or more preceding the date of the removal application due to special circumstances in the trade.
Third Dimension: Exercise of Discretion by the High Court
The third dimension was whether the High Court had properly exercised its discretion under Section 46 in refusing to rectify and strike off the trade marks from the register.
The appellant contended that the public interest in having access to quality goods produced under the Raleigh brand should weigh in favour of keeping the marks alive in Indian hands and that the court should have exercised its discretion to remove the marks.
Reasoning and Analysis of the Judge
The judgement of the Supreme Court was delivered by K. Ramaswamy, J., with whom Faizan Uddin, J., and G.B. Pattanaik, J., concurred.
On the Statutory Framework
The Court began by carefully setting out the relevant statutory provisions.
Section 46: Non-Use of Trademark
Section 46(1)(b) of the Trade and Merchandise Marks Act, 1958, provides that a registered trade mark may be taken off the register if it is established that up to a date one month before the date of application, a continuous period of five years or longer had elapsed during which the trade mark was registered and during which there was no bona fide use thereof in relation to those goods by any proprietor for the time being.
Section 46(3) provides that an applicant shall not be entitled to rely on non-use if the non-use was due to special circumstances in the trade and not to any intention to abandon or not use the trade mark.
Section 48: Registered Users
Section 48 provides for registered users and states that the permitted use of a trademark shall be deemed to be used by the proprietor thereof and shall be deemed not to be used by a person other than the proprietor for the purpose of Section 46 or for any other purpose for which such use is material under the Act or any other law.
Interplay Between Sections 46 and 48
The Court read these provisions together and explained their interplay clearly.
- The benefit of Section 46, meaning the protection from having a mark struck off, would be available during the period for which an agreement was registered and use continued in furtherance of that agreement.
- Under Section 48(1), for the purpose of the deemed use fiction, the use must be either by the registered proprietor or by a formally registered user.
- An unregistered permitted person does not benefit from the deemed-use fiction under sub-section (2) of Section 48.
So far, the statutory position seemed to favour the appellant.
Key Statutory Provisions Summary
| Provision | Subject Matter | Key Principle |
|---|---|---|
| Section 46(1)(b) | Removal for Non-Use | A trademark may be removed after five years of continuous non-use. |
| Section 46(3) | Special Circumstances Exception | Non-use is excused if caused by special circumstances in the trade. |
| Section 48(1) | Registered User | Use by a registered user is deemed use by the proprietor. |
| Section 48(2) | Deemed Use Fiction | Protection applies only where statutory requirements are satisfied. |
On the Concept of Bona Fide User and the Unregistered Licensee
However, the Court went further, and here lay the most important and original reasoning of the judgement. The court held that even in the case of an unregistered licensee — that is, someone who is using the mark with the permission or consent of the proprietor but is not formally registered as a user — so long as there is an unbroken connection in the course of trade between the licensor and the passing off of the licensee’s goods under the trademark, there would be a sufficient connection in the course of trade between the proprietor and the bona fide user of the trademark by that unregistered licensee.
This connection would link the registered proprietor and the user of the trade mark through the activities of the unregistered licensee. The permission or consent for such use may be express or may be implied by a long course of dealings. The appellant must, by course of conduct, be presumed to be a bona fide user for the purpose of Section 46(1)(b).
Supreme Court’s View on Unregistered User
The Court acknowledged a decision of the Delhi High Court in K.R. Beri & Co. vs Metal Goods Mfg. Co. (P) Ltd, reported at AIR 1980 Del 299, where the Division Bench had taken the view that an unregistered user of the trademark, even with the consent of the proprietor, cannot be construed to be a registered user under Section 48(1) and that construing it otherwise would render sub-section (2) of Section 48 surplusage or otiose.
The Supreme Court disagreed with this view, holding that it was not correct to hold that proving a bona fide user of an unregistered user, when a connection between the proprietor of the trade mark and the permitted user in relation to passing off of the goods under the trade mark is proved, renders sub-section (2) of Section 48 surplusage or otiose.
The Delhi High Court’s view on this specific point was, therefore, partly overruled.
Key Principles Emerging from the Judgment
- An unregistered licensee may still qualify as a bona fide user of a trade mark.
- A continuous and genuine trade connection must exist between the proprietor and the user.
- Permission for use may be express or implied through a long course of dealings.
- The existence of a real commercial relationship is more important than mere formal registration.
- Such use can be relevant for the purposes of Section 46(1)(b).
Factual Foundation for the Court’s Conclusion
The factual foundation for this conclusion was important. The High Court had found, and it was not disputed before the Supreme Court, that the appellant had entered into an agreement with Sen Raleigh, who was a permitted user of the trademarks, and had used the trademark until November 1, 1976.
Thereafter, by the registered user agreement dated December 20, 1976, the trade mark had been used for a period of 5 years.
The Court found that it was not in dispute that till the date of filing of the application, the appellant had used the trade mark in passing off the bicycles under the trade mark of the respondent.
The appellant had come to succeed to the position of Sen Raleigh by statutory operation following nationalisation under the IDR Act.
This was therefore not a case of getting the trademark registered under a predecessor Act and continuing under the Act for trafficking in the trademark — an entirely different and less meritorious situation.
Timeline of Relevant Events
| Event | Details | Date/Period |
|---|---|---|
| Use under Sen. Raleigh’s arrangement. | The appellant used the trademark as a permitted user | Up to November 1, 1976 |
| Registered User Agreement | Formal agreement executed | December 20, 1976 |
| Continued Trade Mark Use | ‘Use’ in relation to bicycles | For 5 years thereafter |
| Succession by Statutory Operation | The appellant succeeded Sen Raleigh following nationalisation under the IDR Act | Relevant statutory period |
Reliance on American Home Products Case
The Court also relied on American Home Products Corpn. vs Mac Laboratories (P) Ltd., reported at (1986) 1 SCC 465, to reiterate that getting a trademark registered without any intention to use it in relation to any goods but merely to sell it to others would be trafficking in the trademark, and such conduct would not receive the assistance of the court.
The court requires a real trade connection between the proprietor and the licensee of the goods, and the intention to use the trade mark must exist at the date of the application and must be genuine and bona fide and continue to subsist.
In the present case, the facts showed that such a genuine trade connection existed throughout the relevant period.
Essential Requirements Identified by the Court
- Existence of a real trade connection between proprietor and licensee.
- Genuine intention to use the trade mark at the date of application.
- Bona fide and continuous use of the trade mark.
- No trafficking in the trade mark.
- Ongoing commercial nexus throughout the relevant period.
On the Special Circumstances Exception Under Section 46(3)
The Court held that while the burden lies on the registered proprietor to establish the special circumstances exception under Section 46(3), the application for rectification itself prima facie shows non-use for the relevant period, after which the burden shifts to the proprietor of the trade mark to affirmatively prove that the non-use was strictly due to special circumstances of the trade and not due to any intention not to use the mark.
The non-use must be due to something that would have prevented use by the mark’s owner independently of whether or not those special circumstances had arisen.
Court Findings on Non-Use and Registered User
However, the Court concluded that it was not even necessary to enter into this question in the present case.
The admitted position was that Sen. Raleigh, admittedly a registered user, had been the channel through which the appellant had bona fide used the registered trademark of the registered proprietor.
Since Sen Raleigh was a registered user through whom the appellant had bona fide used the trade mark, there was no discontinuance or non-use of the trade mark by the respondent to establish the special circumstances argument.
Sub-section (3) of Section 46 was therefore not attracted to the facts of the instant case at all.
Pendency of Registration Application Question Left Open
The Court also chose not to decide whether the pendency of the application filed by the appellant under Section 48(1) for registration as a registered user would have constituted a special circumstance in favour of the respondent for the purpose of Section 46(3), leaving that question open.
Key Points on Section 46(3)
- The burden initially lies on the registered proprietor to establish special circumstances.
- A prima facie case of non-use shifts the burden to the proprietor.
- Non-use must result from circumstances beyond the proprietor’s control.
- Use through a registered user constitutes bona fide use of the trade mark.
- In the present case, Section 46(3) was held inapplicable because there was no discontinuance or non-use.
On the Exercise of Discretion Under Section 46
The court affirmed that while exercising discretion under Section 46, the court must take into consideration not only the commercial interests of the parties but also the public interest.
It referred to paragraph 21.82 at page 386 of the Law of Trade Marks and Passing-Off by P. Narayanan (4th Edition), which states that ordinarily a mark will be expunged, taken off the register, when the factual circumstances necessary for its removal are established, unless it is shown that the case falls within the exceptions provided in sub-section (3).
Factors Considered by the Court
| Issue | Court’s Observation |
|---|---|
| Abandonment of Trade Mark | The appellant had never at any point in time abandoned the use of the trademark of the respondent-registered proprietor till the filing of the application. |
| Use After 1954 | The appellant had not used the trademark by itself since 1954 and after the expiry of the permitted use by Sen. Raleigh. |
| Use Following Notice | After receiving notice from the respondent not to use the mark, the appellant used it in passing off bicycles manufactured by it under the respondent’s trade mark. |
| High Court’s Decision | The High Court declined to rectify the trade mark under Section 46(1)(b) of the Act. |
| Supreme Court’s View | The Supreme Court found no persuasive reason to differ from the High Court. |
Supreme Court Conclusion on Discretion
trademark The Court noted that the appellant had never at any point of time abandoned the use of the trade mark of the respondent-registered proprietor till the filing of the application.
Although the appellant had not used the trademark by itself since 1954 and after the expiry of the permitted use by Sen Raleigh, once the respondent issued notice directing the appellant not to use the mark, the appellant came to use the same in passing off bicycles manufactured by it under the trademark of the respondent.
The High Court had, therefore, rightly declined to rectify the trade mark under Section 46(1)(b) of the Act.
The Supreme Court found no persuasive reason to take a different view from that of the High Court.
The High Court had, in its opinion, properly exercised its discretion and refused to rectify and strike off the trade mark from the register of trade marks.
Summary of the Court’s Ruling
- Section 46(3) was not attracted because bona fide use existed through Sen Raleigh, a registered user.
- The Court left open the question regarding the effect of the pending Section 48(1) application.
- Public interest and commercial interests must both be considered while exercising discretion under Section 46.
- The High Court correctly refused rectification under Section 46(1)(b).
- The Supreme Court upheld the High Court’s exercise of discretion and declined to remove the trade mark from the register.
The Final Decision of the Court
The Supreme Court dismissed the appeal. It upheld the judgement of the Division Bench of the Calcutta High Court dated June 3, 1994, which in turn had confirmed the judgement of the Single Judge dated September 13, 1990. The respondents’ 12 trademarks, including the mark “Raleigh”, were not removed from the register. The appeal was dismissed without costs in view of the particular circumstances of the case.
Points of Law Settled in the Case
judgementThis judgment settled several important propositions under the Trade and Merchandise Marks Act, 1958, that continue to guide courts and practitioners in trademark matters.
1. Bona Fide User Under Section 46(1) (b)
The first and most important point is that the concept of a bona fide user under Section 46(1)(b) is not confined to formally registered users under Section 48(1). Even an unregistered licensee, someone using a trademark with the express or implied permission of the registered proprietor, can constitute a bona fide user for the purposes of Section 46, provided there is an unbroken connection in the course of trade between the licensor and the passing off of the licensee’s goods under the trademark. This connection is what links the registered proprietor’s ownership of the mark with the actual commercial use of the mark in the market.
2. Relationship Between Section 46 and Section 48
The second point is a clarification of the relationship between Section 46 and Section 48. The deemed use fiction in sub-section (2) of Section 48, which says that permitted use is deemed to be use by the proprietor, is specifically referable to the registered user or the permitted user who is registered. It does not extend automatically to unregistered permitted users. However, this does not mean that unregistered use is entirely irrelevant. The connecting link of passing off goods under the trademark between the licensor and the unregistered licensee, when bona fide and with permission, can establish a sufficient trade connection to prevent the mark from being taken off the register.
3. Burden of Proof Under Section 46(3)
The third point relates to the burden of proof under Section 46(3). The burden to establish special circumstances for non-use lies on the registered proprietor of the trade mark. An application for rectification itself creates a prima facie presumption of non-use, following which the proprietor must affirmatively show that the non-use was due to special circumstances in the trade alone, not to any other cause and not to any intention to abandon the mark.
4. When Section 46(3) Is Not Applicable
The fourth point is that Section 46(3) is not attracted when, on the facts, there has actually been bona fide use of the trademark, whether by the registered proprietor, the registered user, or an unregistered licensee with a genuine trade connection. The special circumstances exception is only relevant when non-use is actually established.
5. Prohibition on Trademark Trafficking
The fifth point reinforces the principle from American Home Products Corp. . vs Mac Laboratories (P) Ltd., (1986) 1 SCC 465, that trademark registration obtained merely to traffic in the mark — that is, to sell it rather than use it — will not receive judicial protection. There must be a real and genuine trade connection between the proprietor and the licensee, and the intention to use the mark must be genuine and subsisting.
6. Judicial Discretion Under Section 46
The sixth point is that discretion under Section 46 must be exercised having regard to both the commercial interests of the parties and the broader public interest. When the factual circumstances for removal are not established, particularly because bona fide use by an authorised party has been proved, the court is entitled to decline to strike off the mark.
Key Legal Principles at a Glance
| Legal Issue | Principle Settled by the Supreme Court |
|---|---|
| Bona Fide User | An unregistered licensee may constitute a bona fide user if there is a genuine trade connection with the proprietor. |
| Section 46 and Section 48 | Deemed use under Section 48(2) applies to registered users, but bona fide unregistered use remains relevant. |
| Burden of Proof | The registered proprietor must prove special circumstances causing non-use. |
| Special Circumstances Exception | Applicable only where actual non-use is established. |
| Trademark Trafficking | Registration intended merely for sale and not genuine use will not be protected. |
| Court’s Discretion | Commercial interests and public interest must be considered before removing a mark. |
Case Details
| Case Title | Cycle Corporation of India Ltd. vs. T.I. Raleigh Industries Pvt. Ltd. and Others |
|---|---|
| Date of Order | May 10, 1996 |
| Case Number | Civil Appeal No. 8266 of 1996 |
| Neutral Citation | (1996) 9 SCC 430 |
| Name of Court | Supreme Court of India |
| Name of Honourable Judges | K. Ramaswamy, J.; Faizan Uddin, J.; G.B. Pattanaik, J. |
Quick Summary
- The Supreme Court dismissed the appeal and upheld the Calcutta High Court’s judgements.
- The “Raleigh” trade mark and other registered marks remained on the register.
- An unregistered licensee can, in appropriate circumstances, constitute a bona fide user of a trade mark.
- The burden of proving special circumstances for non-use lies on the registered proprietor.
- Trademark trafficking without genuine commercial use does not receive judicial protection.
- Courts must balance private commercial interests and public interest while exercising discretion under Section 46.
