In an April 23 decision, Country Inn v. Country Inns and Suites invited the Delhi High Court to rule on a Defendant motion requesting the stay of a trademark infringement suit under Section 124 of the Trade Marks Act.
The Defendant sought the stay to enable it to pursue its September 2017 challenges before the Intellectual Property Appellate Board (IPAB) to the Claimant’s long-standing registrations over the ‘COUNTRY INN’ trademarks.
The Question
Falling as these actions did in the crosshairs of a trademark infringement claim that was initiated by the Claimants, in 2008, Mr Justice Mehta is required to sift through the sequence of events — the Defendant had contested the claim via a written defence lodged in 2009, and issues for trial had been framed in 2011 — before settling on the simple issue of whether the stay should be entertained. (Indeed, he does not rule or comment at all on the merits of the Defendant’s claim over the ‘COUNTRY INN’ trademark, which was rooted in its own 2002 registration.)
He reduces his inquiry to this:
“The issue is whether such a right of the Defendant in a suit for [trademark] infringement to seek framing of an issue with respect to seeking permission of the Court to approach the IPAB for cancellation proceedings of the [Claimant’s] registered trademark can be filed even though trial in the suit has commenced [many years ago], and issues have been framed around seven years prior to filing the [cancellation] proceedings by the Defendant before the IPAB.”
Patel Field Marshal and What It Means
The law on Section 124 was discussed at length by November 2017’s Indian Supreme Court decision in Patel Field Marshal Agencies v. PM Diesels. [The decision was also considered in detail by Mr Justice Endlaw in January’s Abbott Healthcare (which I wrote about here) and in Nestle earlier this month); a decision that Mr Justice Mehta opts not to reference here.]
In an extremely agreeable manner, Mr Justice Mehta carries the reader through his reading of the Patel Field Marshal Supreme Court in digestible stages. Three points emerge from his discussion of the decision:
First, a stay of proceedings on an infringement claim under the Section 124 setup is only possible where the Defendant has moved to frame an issue questioning the validity of the Claimant’s registration or where the infringement court finds that the Defendant’s move to invalidate is prima facie tenable. (The former covers a cancellation initiated prior to the infringement claim; the latter covers a cancellation initiated after the infringement claim.)
Second, should the infringement court rule in favour of the validity of the Claimant’s registration, the Defendant’s remedy would be by way of appeal, and not by moving a cancellation proceeding before the IPAB. (To the extent that it permits the contrary, the February 2016 full court Delhi decision in Data Infosys is overruled by Patel Field Marshal, says Mr Justice Mehta.)
Third, the window to challenge the validity of the Claimant’s registration is a limited one. Should a Defendant not move cancellation proceedings before the IPAB after securing the leave of the infringement court for this purpose, it is permissible to read Patel Field Marshal as shutting off such Defendant’s right to challenge the Claimant’s registration for good. A similar consequence attaches if the Defendant fails to move the infringement court to challenge the validity of the registration by framing an issue to this effect. (Mr Justice Mehta’s use of the phrases “will no longer surive”, “lost forever”, “lost and abandoned” and “once…abandoned, the same cannot be resurrected” is extremely clear on this.)
The Ruling
This elaborate breakdown leaves Mr Justice Mehta only to quantify the delay by the Defendant in raising the invalidity issue here, and to identify the consequence of such delay.
He finds, fairly, that the Defendant ought here to have raised the invalidity of the Claimant’s registration “before the suit is set down for trial/leading evidence after framing of issues”. These are, to be clear, formally separable stages and it is not immediately clear which of the stages the line is drawn at. However, the ruling that the Defendant failed to do so before either stage is above reproach on facts. (The judge does, however, observe that, for the stay of an infringement trial to have some positive meaning under Section 124, it has to be before the commencement of such a trial.)
No plea of invalidity of the Claimant’s registration was raised by this Defendant in its written defence to the claim, entered in 2009. No such plea was raised when issues were framed for trial in 2011. No amendments to pleadings or to issues were sought subsequently. The 2017 cancellation proceedings were initiated after “substantial evidence” had been led by the Claimant.
Mr Justice Mehta’s conclusion, therefore, that “such a [motion to stay the infringement proceedings] now sought [is] obviously not only is barred in view of [the Patel Field Marshal] Supreme Court, but the endeavour of the Defendant is wholly mala fide; to somehow or the other stop the trial of the suit, which is the real intent of the present application” warrants little disagreement.
The mala fide finding is sufficiently grave for Mr Justice Mehta to make a Rs. 200,000 costs award against the Defendant under Section 35 of the CPC. It is a recourse that he has demonstrated a willingness to explore in appropriate cases in the recent past. Set against the nature of the Defendant’s motion, it is difficult to call it an unjust outcome.
What stands out in Country Inn, overall, is the bold and uncomplicated application of Patel Field Marshal. Much of the authoritativeness constructed into Supreme Court rulings on trademark law in recent years has been often been lost in the rough and tumble and high-volume turnaround of trademark litigation. Country Inn, encouragingly, offers hope that Patel Field Marshal may not go down the same path.
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