Sun Pharmaceuticals Industries Limited v. Cipla Limited

High Court of Delhi at New Delhi | Decided: 3 October 2008 IA No. 6872 of 2008 in CS(OS) No. 1073 of 2008 Presiding Judge: Justice Rajiv Sahai Endlaw

Background

Sun Pharmaceuticals Industries Limited, the plaintiff, held a registered trade mark THEOBID in relation to medicinal and pharmaceutical preparations. The trade mark was originally registered in the name of M/s Natco Fine Pharmaceuticals Private Limited under registration number 440830 dated 26 July 1985 and valid till 26 July 2016. The plaintiff claimed to have acquired the trade mark by assignment along with its goodwill vide a deed of assignment dated 31 October 1998. Following the assignment, the plaintiff applied on 25 July 2000 in Form TM 24 to the Registrar of Trade Marks for entering its name as the subsequent proprietor of the trade mark. As of the date of the proceedings, that application had been pending with the Registrar for approximately eight years without a decision being made.

Cipla Limited, the defendant, was using the trade mark THEOBID-D in relation to medicinal preparations. The defendant’s mark was identical to the plaintiff’s registered trade mark THEOBID, with the addition of the suffix D. The plaintiff filed the present suit for permanent injunction restraining infringement of its registered trade mark THEOBID and passing off, though at the interim relief stage, the plaintiff argued only on the basis of infringement of its registered trade mark and not on the basis of passing off. The plaintiff filed the present application seeking an interim injunction restraining the defendant during the pendency of the suit.

The defendant contended that the plaintiff was not entitled to maintain an action for infringement of the registered trade mark because its name had not been entered on the Register of Trade Marks as proprietor, the trade mark still appearing in the name of the original registrant Natco Fine Pharmaceuticals. The defendant also contended that the plaintiff had approached the court with unclean hands and that the balance of convenience lay against the grant of an injunction given the defendant’s own extensive use of the mark THEOBID-D since 2007. The defendant had itself acquired the unregistered mark in 2007.

Issues for Determination

Three principal questions arose for the court’s determination at the interlocutory stage.

1. Whether the plaintiff, as the assignee of the registered trade mark THEOBID whose assignment had not yet been registered by the Registrar under Section 45 of the Trade Marks Act, 1999, was entitled to maintain an action for infringement of the registered trade mark and to exercise the rights of a registered proprietor under Sections 28 and 29 of the Act.
2. Whether the plaintiff had approached the court with unclean hands by initially claiming extensive prior use of the trade mark by its predecessor and the plaintiff itself, but subsequently giving up that claim upon challenge by the defendant, so as to disentitle the plaintiff from interim relief.
3. Whether the plaintiff’s limited and recent use of the trade mark with actual use by the plaintiff commencing only in January 2008, notwithstanding the assignment dating from 1998 disentitled the plaintiff from maintaining an action for infringement against the defendant who had been in extensive use of THEOBID-D since 2007 and whether the balance of convenience favoured the defendant.

Key Holdings of the Court

1. The court held that the plaintiff, as the assignee of the registered trade mark THEOBID under the deed of assignment dated 31 October 1998, was entitled to exercise the rights of a registered proprietor and to maintain an action for infringement under Sections 28 and 29 of the Trade Marks Act, 1999 notwithstanding that the Registrar had not yet entered the plaintiff’s name on the register under Section 45(1). Title in a registered trade mark vests in the assignee immediately upon assignment which under Section 2(b) is complete on the written act between the parties and not upon registration of the assignment with the Registrar. Registration under Section 45(1) is the registration of title already acquired by assignment and not the means by which title is acquired. The plaintiff could not be penalised for the Registrar’s inaction on an application that had been pending since 2000. The court directed that the deed of assignment be admitted in evidence under the proviso in Section 45(2) which reserves the court’s discretion to admit such documents.
2. The court held that the plaintiff had not approached the court with unclean hands. The plaintiff had initially pleaded that its predecessor had extensively used the mark since 1985, but clarified in its replication that it had reason to believe this but had not been handed evidence of prior use by the predecessor. For the purposes of the interim application, the plaintiff gave up this ground. This conduct did not constitute suppression or misrepresentation amounting to unclean hands.
3. The court held that non-use or limited use of a registered trade mark by the registered proprietor does not disentitle the proprietor from obtaining an injunction against infringement in a suit before the civil court. An action for infringement of a registered trade mark is a statutory right under Sections 28 and 29 of the Trade Marks Act, 1999 which does not condition relief on the plaintiff’s use of the mark. The Act vests the power to remove a mark from the register for non-use in the Registrar under Section 47, not in the civil court hearing an infringement suit. A defendant in an infringement suit who has not sought removal of the mark from the register under Section 47 cannot set up non-use as a defence to undermine the validity of registration and the presumption of validity under Section 31. The plaintiff in the present case had also pleaded sales under the mark from January 2008 and had been actively pursuing registration and protection of the mark which the court treated as forms of use consistent with Section 2(2)(b) of the Act.
4. The court held that the balance of convenience lay in favour of the plaintiff as the registered proprietor of the trade mark. The defendant had itself acquired its rights in the unregistered mark THEOBID-D only in 2007 and as an assignee it was deemed to have made enquiries with the Registrar before doing so and was therefore deemed to know that THEOBID was a registered trade mark. The defendant thus had no equities in its favour. The court held that two products bearing the same trade mark cannot be permitted to exist simultaneously in the pharmaceutical market and that the registered owner cannot be injuncted in favour of a user of an identical mark.
5. The court granted the interim injunction. The defendant, its directors, assignees, distributors and dealers were restrained during the pendency of the suit from manufacturing, selling or dealing in medicinal preparations under the trade mark THEOBID-D or any other trade mark deceptively similar to the plaintiff’s registered trade mark THEOBID. However, having regard to the defendant’s prima facie extensive use of the mark since 2007, the court granted the defendant one month from the date of the order to effect the necessary change so as not to disturb its business operations.

Statutory Provisions Involved

Section 2(1)(v) of the Trade Marks Act, 1999 defines registered proprietor in relation to a trade mark as the person for the time being entered in the register as proprietor of the trade mark. The court examined this definition in the context of whether an unregistered assignee could qualify as a registered proprietor for the purposes of Sections 28 and 29.

Section 2(1)(w) of the Trade Marks Act, 1999 defines registered trade mark as a trade mark which is on the register and is in force. The court distinguished between a registered trade mark and a registered proprietor.

Section 2(b) of the Trade Marks Act, 1999 defines assignment as an assignment in writing by act of parties concerned. The court relied on this provision to establish that assignment is complete upon the written act between the parties.

Section 2(2)(b) of the Trade Marks Act, 1999 permits use of the printed representation of a mark not necessarily in connection with sales of goods to constitute use for the purposes of the Act. The court applied this provision to find that the plaintiff’s pursuit of registration and protection of the mark constituted use.

Section 28 of the Trade Marks Act, 1999 confers on the registered proprietor of a trade mark the exclusive right to use the trade mark in relation to the goods in respect of which it is registered and to obtain relief in respect of infringement.

Section 29 of the Trade Marks Act, 1999 provides for infringement of a registered trade mark by a person who is not the registered proprietor and uses an identical or deceptively similar mark in the course of trade.

Section 31 of the Trade Marks Act, 1999 provides that registration is prima facie evidence of the validity of the original registration of the trade mark and of all subsequent assignments and transmissions.

Section 37 of the Trade Marks Act, 1999 empowers the person entered on the register as proprietor to assign the trade mark.

Section 38 of the Trade Marks Act, 1999 makes a registered trade mark a tradeable property subject to restrictions in Sections 40 to 44.

Section 45(1) of the Trade Marks Act, 1999 requires a person who becomes entitled by assignment or transmission to a registered trade mark to apply to the Registrar to register their title and requires the Registrar to register them as proprietor upon proof of title and to cause particulars of the assignment or transmission to be entered on the register.

Section 45(2) of the Trade Marks Act, 1999 provides that a document of assignment or transmission in respect of which no entry has been made in the register shall not be admitted in evidence by the Registrar, Appellate Board or any court as proof of title to the trade mark by assignment or transmission, unless the Registrar, Appellate Board or court otherwise directs. The court relied on the proviso specifically the words “unless… the court otherwise directs” to admit the deed of assignment in evidence and to exercise its discretion in favour of the plaintiff.

Section 47 of the Trade Marks Act, 1999 empowers the Registrar to remove a trade mark from the register where it was registered without a bona fide intention to use or where there has been no bona fide use of the trade mark. The court held that the power to remove a mark for non-use is vested exclusively in the Registrar under this section and cannot be exercised collaterally by a civil court hearing an infringement suit.

Reasoning of the Court

On the standing of the unregistered assignee, the court distinguished between the registered trade mark as a distinct concept under Section 2(1)(w) meaning a mark on the register and in force and the registered proprietor under Section 2(1)(v) meaning the person entered on the register. The court reasoned that assignment under Section 2(b) is complete upon the written act between the parties and does not require registration. Section 45(1), in providing that a person who becomes entitled by assignment shall apply to the Registrar to register their title, presupposes that the person is already entitled that is, already holds title before the registration under Section 45(1) takes place. Registration under Section 45(1) is therefore the registration of a title already vested in the assignee, not the mechanism by which title is transferred. This reasoning led the court to conclude that the expression registered proprietor in Sections 28 and 29 must be interpreted purposively to include a person who holds title as assignee even before formal registration, because a purely pedantic interpretation would create an intolerable lacuna leaving no one capable of enforcing rights in a registered trade mark during the period between assignment and registration.

The court reinforced this reasoning with two further strands. First, it applied the legal maxims actus curiae neminem gravabit an act of court shall prejudice no man and lex non cogit ad impossibilia the law does not compel a man to do that which he cannot possibly perform to hold that the plaintiff cannot be penalised for the Registrar’s eight-year inaction on its 2000 application. Second, the court noted that Section 45(2), despite its peremptory tone prohibiting admission of unregistered assignment documents, expressly preserves the court’s discretion to admit such documents which the court characterised as analogous to the discretion courts exercise under the Stamp Act in relation to unstamped documents and distinguished from cases under the Registration Act where registration is a condition precedent to conveyance of title.

On disuse as a defence to infringement, the court examined the scheme of the Act and found that Sections 28 and 29 contain no requirement that the registered proprietor be using the mark as a precondition to obtaining relief for infringement. The Act places the power to remove a mark from the register for non-use in the Registrar under Section 47 and the Supreme Court in American Home Products Corporation v. Mac Laboratories Pvt. Ltd. confirmed that the burden of proving the facts necessary for removal lies on the person seeking removal. A defendant who has not sought removal under Section 47 cannot set up the same facts as a defence in a civil infringement suit, because to permit this would undermine the efficacy of registration and the presumption of validity under Section 31. The court also relied on Ruston & Hornsby Ltd. v. The Zamindara Engineering Co. where the Supreme Court confirmed that an action for infringement is a statutory right dependent only on the validity of the registration and not on the plaintiff’s use of the mark.

On the balance of convenience, the court held that the registered proprietor as a class of person cannot be injuncted by a court in favour of someone using the same mark. Two pharmaceutical products under the same mark cannot coexist in the market. The defendant, having acquired the mark in 2007 with deemed knowledge of the registration, had no equities in its favour. The court took a realistic approach by granting the defendant one month to effect the necessary change to its mark rather than applying the injunction immediately, thereby balancing the rights of the registered proprietor against the legitimate business interests of the defendant in winding down its use of the infringing mark.

Doctrinal Significance

This judgment makes three enduring contributions to Indian trade mark law.

The most significant is its authoritative analysis of the rights of an assignee of a registered trade mark who has applied for registration under Section 45(1) but whose application has not yet been decided by the Registrar. The court’s reasoning that title vests in the assignee on the written act of assignment, that registration under Section 45(1) is registration of pre-existing title and not the mechanism of title transfer and that the expression registered proprietor in Sections 28 and 29 must be construed to include an assignee with vested but unregistered title provides a clear and principled resolution of a question on which Indian courts had previously reached conflicting conclusions. The court’s analysis of the Delhi High Court’s consistent line of authority on this point, as distinct from the earlier stricter approach of the Madras High Court and its acknowledgment that the Madras High Court’s Division Bench had itself previously taken the Delhi view, contributes to a more settled understanding of the law.

The court’s holding that Section 45(2) despite its peremptory language preserves the court’s discretion to admit unregistered assignment documents in evidence and that this discretion was deliberately left by the legislature to prevent injustice without extinguishing the rights created by the assignment, is an important contribution to the interpretation of this provision. The analogy with the Stamp Act where inadmissibility does not extinguish underlying rights is practically significant because it prevents a technical procedural requirement from defeating substantive intellectual property rights.

The court’s definitive holding that non-use or limited use of a registered trade mark by the registered proprietor does not disentitle the proprietor from obtaining an injunction against infringement in a civil suit and that the appropriate remedy for a defendant who claims the mark has been abandoned for non-use is to seek removal under Section 47 before the Registrar is a practically important restatement of the boundaries between the civil court’s jurisdiction in infringement suits and the Registrar’s exclusive jurisdiction over the register. This holding protects registered proprietors who have acquired trade marks as part of business transactions, have genuine intentions to use and have been actively pursuing registration and protection, from having their statutory rights extinguished by defendants invoking non-use collaterally in infringement proceedings.

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