India: trademark litigation

Injunctions at a glance

Preliminary injunctions are available under Indian law. Under Section 37(1) of the Specific Relief Act 1963 (SRA) and Order 39, Rules 1 and 2 read with Section 94(c) of the Code of Civil Procedure 1908 (CPC), a preliminary injunction (referred to as a temporary injunction in the statutes) can be granted by the courts for a specific time at any stage of a suit. In every case, the grant or refusal of a temporary injunction is essentially covered by three well-established principles:

  • whether the plaintiff has made out a prima facie case;
  • whether the balance of convenience is in their favour (ie, whether it could cause greater inconvenience to them if the injunction is not granted than the inconvenience that the opposite party would be put to if it is granted); and
  • whether the plaintiff would suffer irreparable loss or injury.

The condition of existence of a prima facie case is essential for the grant of an injunction, while the other two conditions should be satisfied by the plaintiff conjunctively. The courts may also take into account the public interest when granting or refusing a request for the grant of a preliminary injunction.

Permanent injunctions are also available. Sections 37(2) to 38 of the SRA provide that a permanent injunction (referred to as a perpetual injunction in the SRA) may be granted to the plaintiff by the courts to prevent the breach of an obligation existing in the plaintiff’s favour. This injunction perpetually restrains the defendant from doing the act that breaches such an obligation. The essential requirement for the grant of a permanent injunction is the existence of a right on the applicant’s behalf, a corresponding obligation on the part of the opposite party and an infringement or a threat of breach. However, where there is no legal wrong present, permanent infringement would not follow.

The payment of a security or deposit is not necessary to secure an injunction. Ordinarily, where a preliminary injunction is granted, the courts do not ask for the payment of a security or deposit from the plaintiff to secure the injunction. This, however, does not mean that there is any bar on seeking the payment of a security to secure an injunction. Rather, Order 39, Rule 2 of the CPC provides that the court may grant an injunction in favour of a plaintiff on such terms as to the duration of injunction, keeping an account and giving a security. If an injunction is granted without the security or deposit, it is also possible to vary that order of injunction later if necessitated by a change of circumstances under Order 39, Rule 4 of the CPC. Such a variation may include the imposition of a security or deposit to secure the injunction if the changed circumstances so demand.

Legislative framework and causes of action

Registered trademark rights

A suit for infringement can be filed if a registered trademark is being infringed, seeking restraint against the infringing activities and damages. A registered trademark is said to be infringed if a mark is used by an unauthorised person, or by a person who is not the registered proprietor or permitted user using a mark that is identical or deceptively similar to the registered trademark in relation to the goods or services in respect of which the trademark is registered and such use renders the use of the infringing mark likely to be taken as being used as a trademark. In other words, if a mark, identical or deceptively similar to a registered trademark, is used in an unauthorised manner and is likely to cause confusion about its source in the minds of consumers, it amounts to infringement.

Apart from filing a suit for infringement, the Trademarks Act (the TM Act) also provides for remedies under criminal law. False application of trademark and selling goods to which a false trademark has been applied are offences that may entail imprisonment for a term not less than six months, extendible to three years with a fine.

Unjustified threats

Indian law safeguards businesses from unlawful interference and groundless threats of legal proceedings. For example, Section 142 of the TM Act provides that if a person or entity is threatened by someone with legal proceedings for infringement of a registered trademark, they have the option to file a civil suit against the person so threatening to seek a declaration that such threats are unlawful, seek injunction against the continuation of such threats and claim damages if there has been any loss. However, this does not apply once legal proceedings as a consequence of the threat are instituted. Similar provisions are also provided in the Copyright Act, the Patents Act and the Designs Act. However, under the Patents Act and the Designs Act, it is not explicitly mentioned that proceedings due to groundless threats would cease once legal proceedings as a consequence of the threats are instituted.

Unregistered trademark

Infringement of unregistered rights in trading names or styles may become actionable under equity for passing-off if it can be shown that the plaintiff’s trading name or style has accrued extensive goodwill and reputation in India such that, by using deceptively similar trade name or style and packaging, the defendant is passing off its goods as those of the plaintiff. Passing-off is claimed in conjunction with a claim for registered trademark infringement but, if the rights on a trademark are unregistered, passing-off may be the only cause of action available.

To establish a cause of action of passing-off, the plaintiff must prove goodwill through number of years of use of the mark, scale of use, promotion and advertisements, and extent of sales, among other factors. Next, it must be shown that the misrepresentation adopted by the defendant is likely to cause confusion such that consumers would believe that the goods and services of the defendant arose from the plaintiff. It must also be shown that such passing-off has caused loss and injury to the plaintiff, for which the defendant would be liable to pay damages.

Alternative dispute resolution

Under Section 89 of the CPC, the court may refer a dispute to arbitration, conciliation or mediation where it appears to the court that there exist elements of a settlement that may be acceptable to the parties. To encourage alternative dispute resolution, especially mediation, almost all courts in India now have mediation centres and, if there is slightest possibility of mediation, the courts encourage the parties to explore it. In commercial matters, mediation has been made mandatory before instituting a suit unless an urgent relief is contemplated. Thus, a party thinking of initiating a legal process based on a commercial matter must explore mediation first unless a preliminary injunction is sought. In trademark cases, however, pre-suit mediation is very rarely explored as the rights holders always seek a preliminary injunction to immediately stop the infringing activity of the defendant. However, after the suit is filed and preliminary injunction is granted, the defendants settle mostly through mediation to avoid unnecessary litigation costs and consequent damages that the court may impose after trial.

Although mediation can be explored by the parties, issues relating to the validity of trademarks, infringement and other disputed rights that are in rem cannot be decided through other alternative dispute resolution mechanisms such as arbitration. However, if a dispute arises from a contract between parties and the dispute falls within the ambit of the arbitration clause of the contract, even though such a dispute pertains to the copyright or trademark infringement, it still could be decided by arbitration as it will fall under the ambit of right in personam.

Litigation venue and formats

Trademark suits cannot be filed before a court inferior to a district court. If the valuation of the suit, which is ordinarily based on the brand value and damages sought against the defendant, exceeds the specified value of 300,000 Indian rupees, the suit is to be filed before a commercial court. In a recent development, the High Court of Delhi has constituted a separate intellectual property division to hear all IP matters that are filed in the High Court of Delhi. Commercial courts have separate rules and stricter timelines to ensure that they are adjudicated expeditiously.

In another recent development, the High Court of Delhi held that all IP disputes, irrespective of their valuations, should be listed before a commercial district court judge or the commercial division of a high court, but not before a non-commercial district judge. In other words, all trademark-related suits cannot be filed before a court inferior to a district court of a commercial division. However, if the value is less than 300,000 rupees, the suit will proceed as a normal civil suit not governed by the stricter commercial court rules.

Damages and remedies

Damages

The owner of a trademark can recover damages in relation to acts of infringement. The principle involved in the awarding of damages in India has seen a great evolution in the recent past, and the courts have now begun awarding additional punitive damages to curtail the menaces of counterfeiting and trademark infringement.

The award of damages is more prevalent in trademark disputes than in any other IP domain. The principles laid down for the award of damages in trademark disputes have acted as a benchmark for other IP domains as well. On one hand, the grant of punitive damages has rested majorly on the conduct of the defendant and the flagrancy of the violation. On the other hand, the award of compensatory damages depends upon the establishment of loss suffered by the plaintiff and profits made by the defendant along with a basis of evaluation for these calculations. Plaintiffs can either claim damages or a rendition of accounts – not both. In Titan Industries v Jain (2006 (32) PTC 95 Del), the High Court of Delhi held that, where damages and rendition of accounts are claimed together, the plaintiff must elect one single relief during the course of the trial. Moreover, the plaintiff is required to establish how they have reached the claimed figure and what calculation has been employed.

Accounts of profits

A registered proprietor of a trademark can seek account of profits made by the infringer if successful in a suit for infringement. However, the plaintiff is not entitled to calculate damages to include their loss as well as profits of the defendant as they can use only one of these for the purpose of the calculation of damages. Account of profits involves a lengthy process of the rendition of accounts of the defendant, which includes verification of records and books of accounts of the defendant. Therefore, it is not a preferred remedy. However, if the plaintiff opts for an account for profits, they are entitled to an inspection of the books of accounts of the infringer during the process of the rendition of accounts.

Injunctive relief

Injunction is one of the civil remedies recognised under the TM Act, along with damages or account of profits. It is the most essential remedy sought in every suit for infringement. Injunctive relief can be interim or permanent. Interim injunctions are granted for a specific time or during the pendency of the legal proceedings. A permanent injunction is granted when the plaintiff succeeds in their claim of infringement and a final decree is awarded.

Other reliefs

An interim injunction can be combined with other reliefs, such as:

  • an injunction to restrain the defendant from disposing of their assets until the trial ends or the judgment is delivered;
  • orders to enter the premises of the defendant and take inspection of relevant documents and articles, and take copies or remove them to safe custody; or
  • orders to search and seize against unnamed or unknown defendants.

Remedies under criminal law are also available, which include imprisonment and fine. There are administrative remedies in place such as opposition, rectification of the register of trademarks and prohibition of the import or export of infringing goods at customs, among others.

Evidencing the case

Investigation and first steps

The basic investigation and collection of evidence in infringement of trademarks include the following:

  • when the infringement first took place;
  • the extent of infringement;
  • who are the distributors and retailers of infringing products (including e-commerce platforms);
  • company profile and location;
  • purchasing sample products (evidentiary purchase); and
  • site details (photos, videos, etc)

Before filing a lawsuit, it is essential for rights holders to gather all documents relevant to the case. These documents must be filed along with the plaint itself.

Survey evidence

Acceptance of survey evidence is not clear in India. Although some courts have accepted survey evidence as prima facie evidence to determine an interim injunction, its evidentiary value is not established. Some courts have held that survey evidence is not admissible unless the persons surveyed are cross-examined, while others have raised doubts on the methodology and authenticity of such surveys, and have considered them hearsay.

Use of expert witness

There are no significant instances where expert witnesses have been called in trademark matters in India.

Available defences

In a suit for infringement, the defendant can avail the following defences:

  • fair use;
  • prior use;
  • no likelihood of confusion;
  • difference in market where conflicting marks are used;
  • non-use of the mark by the registered proprietor;
  • delay and acquiescence; and
  • invalidity of the registered trademark.

Appeal process

Appeals against the decision, or an order of the registrar under the TM Act or the rules made thereunder may be preferred to the commercial division of the relevant high court. Where the final judgment was passed by a high court in its first instance jurisdiction, the appeal lies before a division bench of the high court in question.

Second appeal

A party can file a second appeal against the first appeal decision before a higher appellate court if it can show that a substantial question of law is involved.

Special leave petition

As per Section 104 of the CPC, it is not normally possible to appeal further. However, under Article 136 of the Constitution of India, the Supreme Court has the authority and discretion to grant leave to hear an appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in India.

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