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Stay of Suit proceeding under Section 124 of Trademarks Act 1999

Section 124 of Trademarks Act 1999 is a unique provision which provides for stay of suit involving trademarks infringement, in certain situation. This provision pertain to Suit pertaining to Trademark Infringement as the opening word of this provision clearly indicates that.

Trademarks Registration provides exclusive right to the Registered proprietor. When a Suit is filed for infringement of Trademark, then registered proprietor is only required to show registration certificate. Section 31 of the Trade Marks Act 1999 provides prima facie presumption in favor of registered proprietor. Section 124 of Trademarks Act provides as under:

Section 31 : Registration to be prima facie evidence of validity:
  1. In all legal proceedings relating to a trade mark registered under this Act (including applications under section 57), the original registration of the trade mark and of all subsequent assignments and transmissions of the trade mark shall be prima facie evidence of the validity thereof.
  2. In all legal proceedings as aforesaid a registered trade mark shall not be held to be invalid on the ground that it was not a registerable trade mark under section 9 except upon evidence of distinctiveness and that such evidence was not submitted to the Registrar before registration, if it is proved that the trade mark had been so used by the registered proprietor or his predecessor in title as to have become distinctive at the date of registration.
In such a situation the Defendant is granted remedy to seek cancellation of Trademark cancellation under Section 124 of Trademarks Act 1999. This Section provides two situation. In situation one when cancellation petition is filed prior to institution of suit. In this situation, the suit proceeding is bound to be stayed awaiting the outcome of the rectification proceeding.

In second situation , where invalidity of registered trademark is pleaded and party raising such objection satisfies the court that the registration of trademark is prima facie invalid, then subject to filing the trademark cancellation petition by such party within 3 months , suit proceeding has to be stayed. This is another thing that still under Section 124 (5) of the Trademarks Act 1999, the Court can pass interlocutory order.

Suit for infringement of trademark and passing off are, though different in nature, still for all practical purpose the same involves similar pleadings and documents. Hence in almost all cases, where right holder is registered proprietor the same files combined suit for trademark infringement and passing off.

What would be effect of Section 124 of Trademarks Act 1999 in such suit where relief of infringement of trademark and passing off are sought in one suit. This issue was dealt with by Hon'ble High Court of Delhi in CM (M) No.428 of 2021 titled as Parveen Kumar Gupta vs Mr. Ravi Chadha And Ors.. While disposing off the afore mentioned petition vide Judgement dated 06.08.2021, the Hon'ble High Court of Delhi observed as under:

9. It is apparent from this order that this court had noted the submissions to the effect that the suit was also one for passing off, delivery, etc., which was not covered under Section 124(1) of the Trade Marks Act, and which fact had been overlooked in the orders of the learned Trial Court. It was in the light of these submissions that when the petitioner sought liberty to approach the Trial Court with a Review Petition, the prayer was allowed. It does appear that the question of limitation had not been agitated before this court during those proceedings.

The learned Trial Court appears to have fallen into error in rejecting the application under Section 5 of the Limitation Act by observing that it was taking a 'holistic reading' of the order dated 6th December, 2017. In our view, a 'holistic reading' would have pointed out to the learned Trial Court, that permission to file a review petition had been granted in the backdrop of the submission that while a suit for infringement could be stayed under Section 124 of the Trade Marks Act, the suit for passing off could continue.

10. This court was dealing with a similar issue in J. K. Oil Industries (supra) where it referred to several decisions including those that have been relied upon by the learned Trial Court in its order dated 6th March, 2017 to stay the suit, namely, Data Infosys Ltd. (supra) and Micolube India Ltd. (supra) as also the judgments of the Division Bench of this court in Puma Stationer P. Ltd. v. Hindustan Pencils Ltd., 2010 (43) PTC 479 (Del)(DB) and Formica International Ltd. v. Caprihans (India) Pvt. Ltd., AIR 1966 Cal 247, to hold that a suit for passing off can continue even when the suit for infringement of trade mark was liable to be stayed under Section 124 of the Trade Marks Act.

11. The settled law is thus that Section 124 of the Trade Marks Act does not provide for stay of action against passing off and is applicable only where a rectification application/cancellation has been sought against the registered trade mark that a plaintiff claims to be exclusively its own. This is intended to avoid conflicting decisions by the Civil Courts and the Tribunal."

Thus the Hon'ble High Court of Delhi has reaffirmed the previous finding of its predecessor court in its Judgement reported as J. K. Oil Industries v. Adani Wilmar Limited, 2018 SCC OnLine Del 9367 , where in it has already been laid down that Trademarks Act 1999 is effective for the relief pertaining to suit involving trademark infringement and not for passing off.

It is because the suit for infringement of trademark is based on the registration. On the other hand passing off remedy is based on common law right and has got nothing to do with trademark registration. This is the reason why Section 124 of Trademark Act 1999 and stay contemplated there in have no bearing to the passing off action.

Written By: Ajay Amitabh Suman, Advocate, Hon'ble High Court Of Delhi

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