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The Interplay Between Section 124 of the Trademarks Act 1999 and Stay of Suit Proceedings

The filing of a rectification petition before the Intellectual Property Appellate Board (IPAB) in response to a trademark infringement suit is not an uncommon occurrence in the realm of intellectual property disputes. The Trademarks Act 1999 of India provides a legal framework for such proceedings, including the provision of Section 124, which allows defendants to seek a stay of the suit proceedings pending the outcome of the rectification petition. However, the recent decision by the Hon'ble Division Bench of Telangana High Court, which rejected the defendant's request for a stay, has brought to light the complexities and nuances of this provision and its application.

Section 124 of the Trademarks Act 1999:
Section 124 of the Trademarks Act 1999 is a pivotal provision that grants the defendant the right to apply for a stay of the suit proceeding when a rectification petition is filed before the IPAB. This provision recognizes the potential for disputes over the validity of registered trademarks and seeks to strike a balance between the interests of the plaintiff and defendant. It allows the defendant to halt the Suiy proceedings temporarily, awaiting a decision by the IPAB on the rectification petition, which may question the validity of the plaintiff's registered trademark.

The Recent Challenge:
In this recent case under discussion, the defendant exercised their right under Section 124 to apply for a stay of the suit proceedings. However, their application was rejected, and the matter was brought before the Hon'ble Division Bench of Telangana High Court for review. The crux of the challenge lay in the Division Bench's analysis of whether the defendant had prima facie satisfied that the registered trademark of the plaintiff was invalid.

The Division Bench's Decision:
The Hon'ble Division Bench's decision was predicated on a meticulous examination of the contents of the defendant's written statement. Their primary conclusion was that the defendant had failed to prima facie establish that the plaintiff's registered trademark was invalid. This assessment was pivotal in their rejection of the stay application.

Analysis and Implications:
The decision of the Hon'ble Division Bench raises important questions and offers valuable insights into the interpretation and application of Section 124 of the Trademarks Act 1999. "Firstly, it underscores the significance of the defendant's burden of establishing a prima facie case for the invalidity of the plaintiff's trademark."

Moreover, the decision reaffirms the principle that a stay of suit proceedings is not to be granted automatically merely because a rectification petition has been filed. The courts are tasked with ensuring that the defendant's claim of trademark invalidity is credible and compelling enough to warrant a stay.

The Concluding Note:
The recent decision by the Hon'ble Division Bench of the Telangana High Court provides a nuanced understanding of the interplay between Section 124 of the Trademarks Act 1999 and the stay of suit proceedings. It emphasizes the importance of a defendant's burden to establish a prima facie case for trademark invalidity and reinforces the principle that such stays are not to be granted as a matter of routine.

The Case Law Discussed:
Case Title: Chirec Public School vs Shri Shakti Schools Pvt. Ltd.
Date of Judgement/Order:30/10/2023
Case No.Civil Revision Petition
Neutral Citation No: N.A.
Name of Hon'ble Court: High Court of Telangana
Name of Hon'ble JudgeChief Justice Alok Aradhe and Shravan Kumar.

Information and discussion contained herein is being shared in the public Interest. The same should not be treated as substitute for expert advice as it is subject to my subjectivity and may contain human errors in perception, interpretation and presentation of the fact and issue involved herein.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: [email protected], Ph no: 9990389539

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