Supreme Court of India | Civil Appeal Nos. 4767-4769 of 2001 Decided on 29 November 2017
Background
P.M. Diesels Ltd. was the registered owner of three trademarks all carrying the words “Field Marshal.” The registrations dated back to 1964 and 1968 and covered the marks “Field Marshal,” “Field Marshal” in a specific lettering style and “FM Field Marshal.” These registrations were granted in favour of the company through its predecessor.
In 1982 the appellants Patel Field Marshal Agencies applied to register the mark “Marshal” for their own use. P.M. Diesels came to know of this and sent a legal notice in July 1982 asking the appellants to stop using the mark. Things remained at this level until 1989 when P.M. Diesels filed a suit before the Delhi High Court for infringement of trademark seeking a permanent injunction and rendition of accounts of profits.
The appellants in their written statement contested the suit and also challenged the validity of the registered trademarks of P.M. Diesels. The Delhi High Court dismissed the interim injunction application in 1995 on jurisdictional grounds. On appeal the Division Bench reversed this and sent the matter back for consideration on merits. In the meantime a single judge granted temporary injunction in favour of P.M. Diesels in 1999. Later in 2008 the same single judge held that the Delhi High Court lacked jurisdiction and directed return of the plaint to be filed before the competent court in Gujarat at Rajkot. The plaint was accordingly transferred and came to be numbered as Civil Suit No. 1 of 2009 before the Additional District Judge at Rajkot.
Separately in 1997 while the Delhi suit was still pending the appellants filed three rectification applications before the Gujarat High Court under Sections 46 and 56 of the Trade and Merchandise Marks Act 1958 seeking cancellation of the three registered trademarks of P.M. Diesels. The Gujarat High Court’s single judge dismissed all three applications in April 1998 and the Division Bench affirmed this in November 1998. This order of the Gujarat High Court is what came up for challenge before the Supreme Court in Civil Appeal Nos. 4767-4769 of 2001.
Issue for Determination
The core question that the Supreme Court had to answer was this:
When a suit for infringement is already pending and the issue of validity of the registered trademark has been raised in that suit but the concerned party has not pursued it by filing a rectification application before the High Court under Sections 111 read with 107 of the 1958 Act can that party still independently file a rectification application under Sections 46 or 56 of the same Act before a separate forum?
This question was also relevant under the Trade Marks Act 1999 given that Sections 47 57 124 and 125 of the 1999 Act are worded on the same lines as the corresponding provisions of the 1958 Act.
Statutory Provisions Involved
The court examined four key provisions of the Trade and Merchandise Marks Act 1958.
Section 46 allows any aggrieved person to apply to the High Court or Registrar for removal of a registered trademark from the register on grounds of non-use either from the beginning or for a continuous period of five years.
Section 56 allows any aggrieved person to apply for cancellation or variation of a trademark registration on grounds of any contravention of a condition of registration or for rectification of any wrongful entry in the register.
Section 107 provides that where in an infringement suit the validity of a trademark is questioned the rectification application has to be filed before the High Court only and not before the Registrar regardless of what Sections 46 or 56 otherwise say.
Section 111 provides the complete procedure for what happens when validity of a trademark is questioned inside an infringement suit. It requires the Civil Court to stay the suit if rectification proceedings are already pending. If no such proceedings are pending and the Civil Court finds the plea of invalidity prima facie tenable it must frame an issue and give the concerned party three months to approach the High Court for rectification. If the party does not file such an application within the allowed time the plea of invalidity is deemed to have been abandoned under Section 111(3) and the suit proceeds on the remaining issues.
Key Holdings of the Court
The Supreme Court dismissed all the appeals and upheld the orders of the High Courts. The court laid down the following clear positions:
- The right to seek rectification under Sections 46 and 56 of the 1958 Act and the remedy available under Sections 107 and 111 of the same Act are not two parallel or independent rights operating in different fields. They are the same jurisdiction exercised under two different procedural regimes depending on whether a suit for infringement is pending or not.
- When a suit for infringement is pending and the issue of validity of the trademark is raised in that suit the procedure prescribed under Section 111 exclusively governs the matter. The party raising invalidity must wait for the Civil Court to frame an issue on it and then approach the High Court within the prescribed time.
- If the party fails to file a rectification application within the time granted under Section 111(2) the plea of invalidity is deemed abandoned under Section 111(3). This abandonment is not merely for the purposes of the suit. It is a complete abandonment which takes away the right to agitate the same question separately under Sections 46 or 56 before any forum.
- Civil Courts have no jurisdiction to decide the merits of the validity of a trademark registration. That question can only be decided by the prescribed statutory authority which is the Registrar or the High Court under the 1958 Act or the Intellectual Property Appellate Board under the 1999 Act. However in situations where a suit is pending the statutory authority can take up the question only if the Civil Court first finds the plea prima facie tenable.
- Where the Civil Court does not find the plea of invalidity prima facie tenable the remedy available to the aggrieved party is to challenge that finding in appeal before a higher court and not to independently file a rectification application under Sections 46 or 56.
Reasoning of the Court
The court approached the matter by reading the scheme of the 1958 Act as a whole rather than treating the individual provisions as standalone rights.
The court observed that Section 107 itself makes a significant departure from the general rule. It says that even though Sections 46 and 56 ordinarily allow an application to be made before the Registrar or the High Court once an infringement suit is filed and the validity question arises in it the application for rectification must go to the High Court alone. This itself signals that the legislature intended a different and specific regime to apply when a suit is already on foot.
Section 111 further completes this scheme. The court read Section 111(3) not as a procedural penalty but as a substantive consequence that extinguishes the right itself. The court reasoned that if abandonment under Section 111(3) was only for the purposes of the suit then a party who chose not to pursue rectification within the suit’s timeline could later come back and file an independent rectification application under Section 46 or 56 and potentially upset a final decree that the Civil Court had already passed on the remaining issues. The court held that such a result would create uncertainty and effectively allow a party to get around the statutory deeming provision through a back door.
The court also rejected the argument that requiring the Civil Court to frame a prima facie issue before the statutory authority could take up the matter amounts to seeking “permission” from a subordinate court to approach a higher court. The court clarified that the prima facie satisfaction of the Civil Court is a threshold requirement meant to filter out frivolous and untenable claims of invalidity and it does not in any way bar access to the High Court or IPAB. It is a precondition built into the scheme to protect registered trademarks from being subjected to vexatious challenges every time an infringement suit is filed.
The court also disagreed with the view taken by the Full Bench of the Delhi High Court in Data Infosys Limited v. Infosys Technologies Limited which had held that the abandonment under Section 124(3) of the 1999 Act is confined only to the suit and that an independent rectification application would still be maintainable. The Supreme Court found this view inconsistent with the true legislative intent and held that the abandonment is absolute in nature.
Doctrinal Significance
This judgment is one of the more important ones in Indian trademark law because it settles a question that had been causing conflicting decisions across High Courts for years.
Before this judgment there was genuine uncertainty about whether a person who raised the invalidity of a trademark in an infringement suit but failed to follow through with a rectification application could still file one independently before the Registrar or the IPAB. The Madras High Court and the Delhi High Court Full Bench had taken the view that these were parallel remedies and the failure to file rectification within the suit’s timeline did not kill the independent statutory right. The Supreme Court disagreed with this view entirely.
The judgment establishes that in Indian trademark law once a suit for infringement is filed and the validity question enters that suit the entire matter is governed by the special procedural regime of Sections 107 and 111 of the 1958 Act or Sections 124 and 125 of the 1999 Act. The general rectification remedy under Sections 46 and 56 of the 1958 Act or Sections 47 and 57 of the 1999 Act effectively goes into suspension once the suit is alive with an invalidity plea in it.
More importantly the court’s interpretation of the deemed abandonment clause as a total and substantive loss of right and not merely a procedural forfeiture within the suit brings in much needed finality to infringement proceedings. It prevents a party from strategically stalling a suit and then separately challenging the trademark’s validity through a different route at a later point.
For trademark practitioners in India this case is a reminder that the moment a client is involved in an infringement suit where the validity of a trademark is in question the timelines under Section 124 of the 1999 Act are non-negotiable. Missing those timelines does not just affect the suit. It can permanently close the door on rectification.
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