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Interpretation to Section 124, Trademark Act 1999


Posted By Sarthak on 12 March 2018

Section 124 of the Trademark Act 1999 deals with a provision regarding the stay of proceedings. The section has been quoted below;

 

124. Stay of proceedings where the validity of registration of the trade mark is questioned, etc.

 

  1. Where in any suit for infringement of a trade mark— (a) the defendant pleads that registration of the plaintiff’s trade mark is invalid; or (b) the defendant raises a defence under clause (e) of sub-section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant’s trade mark, the court trying the suit (hereinafter referred to as the court), shall,— (i) if any proceedings for rectification of the register in relation to the plaintiff’s or defendant’s trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings; (ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff’s or defendant’s trade mark is prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the Appellate Board for rectification of the register. 
  2. If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub-section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings. 
  3. If no such application as aforesaid has been made within the time so specified or within such extended time as the court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case. 
  4. The final order made in any rectification proceedings referred to in sub-section (1) or sub-section (2) shall be binding upon the parties and the court shall dispose of the suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark. 
  5. The stay of a suit for the infringement of a trade mark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction, directing account to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit.”

Hon’ble Supreme Court of India in its recent decision, in a case titled as Patel Field Marshall Vs. P. M. Diesels Ltd., has interpreted Section 111 of the Trade and Merchandise Marks Act, 1958 which is pari materia to Section 124 of the Trademarks Act 1999. In the order the Supreme Court confirms the issue of validity of a trademark is to be decided only by the High Court (under 1958 Act) or the IPAB (under 1999 Act). The grey area in the order, is the situation (extensively prevailing) wherein both rectification proceedings and civil suits are already pending in respect of the same dispute, and no finding from civil suits is available in this scenario. If the judgement is giving a strict reading, none of these rectifications can proceed without the finding of the civil court. However, in cases where the civil suit is stayed, there shall be no doubt as it ought to be assumed that the Trial Court has applied its mind for the same and referred the matter to the IPAB or Tribunal. In cases where they are pending in parallel, Trial Courts will have to come up to speed to decide if the suits ought to be stayed and frame issues accordingly or find that the plea of invalidity is untenable.

 

The above mentioned Supreme Court order is very clear, that in the event of there being no civil lis between the parties, the parties have an independent right to seek rectification. The position considered is when there is a civil suit relating to infringement, wherein the validity of the mark is raised as a defence. In such a scenario, when the parties are before the Trial Court for framing of issues, the following are the possible consequences:

1. Firstly, when neither party seeks to have an issue framed on invalidity and the suit is disposed off, then the issue of validity and rectification cannot be raised thereafter as it would lead to the finality of the decree being perpetually in doubt

2. Secondly, when there is a civil suit instituted after or in parallel to the rectification proceedings, there is a requirement to get a finding from the Trial Court as to the prima facie tenability of the plea invalidity prior to the IPAB/Tribunal taking up the rectification. In coming to the said conclusion, the order is quite categorical that the conclusion as to the validity is to be decided only by the IPAB/Tribunal. Therefore, the logical corollary would be that the finding of the Civil Court being only a prima facie one, would not be binding or even persuasive on the IPAB/Tribunal exercising its independent jurisdiction.

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